Zero probability of recession in India while US has a 40 per cent chance: Study

New DelhiEdited By: Abhinav SinghUpdated: Aug 10, 2022, 11:40 AM IST

The sky-high inflation in the US has contributed to the probability Photograph:(Reuters)

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Currently, in a perilous situation due to war, Europe has not fared much better in the list. The economists have also predicted the recession probability for countries such as Sri Lanka, New Zealand and Australia

Amid a global pandemic, a war between two nations and a breakdown in the supply chain system resulting in sky-high inflation rates, most countries and their economies are in the doldrums. Industry experts have been fuelling fears that a global recession is just around the corner.

Now, a Bloomberg survey has attempted to gauge the percentage probabilities of various countries slipping into recession. While the survey results may be cheerful for a country like India, it is not so much for Sri Lanka, the US or even the whole of Europe.

According to the survey, the island nation of Sri Lanka is at the precipice of recession. There is an 85 per cent probability that Sri Lanka slips into recession, as early as next year. The sharp tumble in fortunes is a marked departure from the 33 per cent chance recorded last year. 

Contrary to Sri Lanka, its neighbouring country of India has a zero probability of facing a severe economic slump, according to the economists involved in the research. Despite the Indian rupee touching a historical low against the US dollar, the Reserve Bank of India (RBI) has been able to keep the economy in good shape by increasing lending rates or repo rates by 90 basis points cumulatively in the various monetary meetings. 

What about US?

However, the US has not fared well in the survey as economists believe that there is a 40 per cent chance of the country slipping into a recession by next year. It is pertinent to note that the inflation rate in the US increased by a whopping 8.6 per cent in May 2022, reaching a forty-year high.

Nearly every US-based brokerage firm is of the same view that the US can easily slip into recession if course-corrective measures are not employed.

As for other countries, the survey shows that China, Taiwan and Australia have a 20 per cent chance of slipping into recession. Meanwhile, New Zealand has a 33 per cent chance. 

On a whole, Asia is still finely balanced with only a 20-25 per cent probability of a recession. However, with the Russia Ukraine crisis affecting the entire landscape of Europe, the probability meter has crept up to 55 per cent for the continent.

(With inputs from agencies)