Russian Central Bank: World Could Face Economic Turmoil Like in 2008

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The global economy may be less than 18 months away from a financial catastrophe on the magnitude of the 2008-2009 global economic collapse, according to Russia’s Central Bank, Moscow Times writes.

The bank warned of “serious imbalances” in the global economy, rising and unsustainable debt levels in both the public and private sectors, and persistent inflation threats across the globe in a harsh prediction.

“A large-scale financial crisis may emerge in the global economy in the first quarter of 2023, similar to the crisis of 2008-2009, with a lengthy period of uncertainty and a prolonged recovery,” the bank warned in a study released Thursday.

The scenario was offered as one of the Bank’s “alternative” predictions for how the global economy could evolve over the following three years. A large-scale recession is averted in its “baseline” scenario, which is regarded as most probable, as inflation moderates over the next year.

Nonetheless, the fact that the bank has examined the potential of a worldwide financial catastrophe and released research on how it would impact Russia indicates that Governor Elvira Nabiullina regards it as a real possibility.

For months, Nabiullina has maintained that the current rise in inflation is unlikely to be transitory, a stance that contradicts the views of the powerful US Federal Reserve.

The Central Bank has now gone even farther, warning that the global economy is unprepared if inflation does not fall as anticipated. This would compel major central banks to quickly alter their ultra-easy monetary policies in order to temper the estimated $25 trillion poured into the economy via extraordinary asset-purchasing programs.

Many Russian officials, as well as critics of such quantitative easing, claim that the program has generated hazardous asset bubbles across the economy.