What are the factors that are contributing to the economic recession in 2023 on a global scale?

According to IMF Chief Kristalina Georgieva, it is anticipated that approximately one-third of the global economy will undergo a recession this year. Economic growth is predicted to be slower than in the previous year, largely due to major economies around the world experiencing a decline in growth. The US, China, and Europe, which represent three of the world's biggest economies, have exhibited indications of weaker growth, potentially pushing the global economy closer to a recession. The World Bank has projected global economic growth to be 1.7% in 2023 and 2.7% in 2024.

China, being the world's second-largest economy, can have a significant impact on the global economy. China's zero Covid policy has hindered its economic growth and efficiency, and the country's housing market is in crisis. The government is struggling to manage these events, which are causing damage to the economy.

Europe is heading towards an economic slowdown, with the EU and Eurozone countries facing increasing inflation, leading citizens to protest. Although inflation has eased, the region is still susceptible to a rise in household expenses. Due to the Russia-Ukraine conflict, there is an energy crisis in Europe, and people have faced heating issues during the cold season. The continued unrest has also caused damage to economic growth, and projections suggest that inflation will remain high in 2023.

The US has also experienced a contraction in GDP, leading to concerns that the economy may fall into recession. The ongoing Russia-Ukraine conflict and the reemergence of the Covid-19 outbreak in China have contributed to the slowdown in major economies.

Despite these concerns, initiatives such as Digital India and other government campaigns have helped mobilize the adoption of Fintech. According to the statement, Piyush Goyal, the Commerce and Industry Minister, is optimistic about India's ability to propel worldwide expansion in the near future.

Although this potential slowdown in 2023 is anticipated to be significant, it is not expected to be as severe as the 2008 financial crisis, which was largely attributed to financial institutions and banks. The Indian economy was significantly impacted during the 2008 crisis, but the country is now in a much better position due to prudent fiscal and monetary policies implemented over the years.

Investors are losing confidence in the markets, resulting in fluctuating stock prices. Wealth managers can help investors navigate these markets by ensuring asset-allocated portfolios that cushion against volatility and avoid bleeding portfolios that may lead to behavioural finance taking over.

Diversification in portfolios is crucial to staying away from market noise and keeping portfolio positions intact for long-term goal fulfilment.