Companies that are inherently negative cash flow (i.e. value destroyers) need to die, so that they stop consuming resources, he added. World Bank chief David Malpass warned this week that Russia’s ongoing invasion of Ukraine could cause a global recession as the price of food, energy and fertiliser jump.
As we look at the global GDP, it’s hard right now to see how we avoid a recession… The idea of energy prices doubling is enough to trigger a recession by itself, he was quoted as saying in media reports. Last month, the World Bank cut its global economic growth forecast for this year by almost a full percentage point, to 3.2 per cent. Developing countries are also being affected by shortages of fertiliser, food and energy. China has been hit harder by the latest round of lockdowns. The Covid-19 measures have led to a sharp slowdown in economic activity across the country. The US could also hit a recession before the end of this year or by early 2023, according to the chief investment officer of Hayman Capital. In India, foreign portfolio investors have pulled out around Rs 2.5 lakh crore from the Indian equity market. nGlobal financial services provider firm Moody’s Investors Service has slashed India’s GDP projection to 8.8 per cent for 2022, from 9.1 per cent estimated previously. The Russia-Ukraine war, high inflation, Covid-19 lockdowns in China and rising interest rates are the reasons behind the economic activities being hampered across the globe.