The impact of rising prices and the war in Ukraine triggered the paralysis of economic activity around the world until 'knocking on the door' of recession.
This can be felt across markets from the United States (US) to Europe to Asia as business activity declines with most sectors projecting a gloomy outlook.
The US economic situation is understood to have experienced the most significant contraction in business activity in August when the figure dropped to the lowest level since May 2022.
Data from manufacturers and service providers show that demand is weakening as interest rate increases and inflation weigh on consumers.
No less different in Europe, the manufacturing sector pioneered the fall but it was accommodated by the rebound in the service sector after the restrictions (lockdown) ended.
Although the United Kingdom's (UK) purchasing management index remains above the 50-point level, separating expansion from contraction, it has recorded an unexpectedly sharp fall in manufacturing activity.
Opening the window to the Asian region, Japanese production is experiencing a decline with cases involving Covid-19 resurging and it is indirectly adding pressure to demand which is already struggling with inflation.
Based on these inputs, Pacific Investment Management Co gave an impression that the economy will continue to be gloomy when most central banks are still focusing on controlling inflation by increasing the cost of loans.
It was also supported by Andrew Harker from S&P Global saying that the European region showed a contraction in the 3rd quarter (Q3) that crossed sectors, further weakening economic activity as a whole.
Overall, against the backdrop of high inflation and a significant global economic slowdown, the central bank needs to play an important role in implementing the best actions to ensure the recovery of the world economy.
