World economy crumbling down on graphs, no hope for a change in 2023!

In 2020, a deadliest virus appeared in Wuhan and spread across the world. This virus killed millions regardless of their national identity. Even the USA, the biggest economy in the world, could not save its people dying. The lockdowns put during these pandemics slid the economic graphs down. Just when the world could hope to recover from the post pandemic slowdown, the Russian- Ukraine war affected the market supply chains. What exactly are going to be the economic trends in 2023 and what changes would these trends bring in the world economy that's probably heading for a global recession?

In 2022, we've seen a drastic economic downfall of Pakistan and Sri Lanka for which Chinese debt trap can be considered a prime factor followed by Covid-19 lockdowns and the war in Europe. Apart from this, a substantial shift can be seen in the UK, which failed in the post pandemic recovery. Though these slowdowns are not visible in the US and China so obviously but, they too seem to be heading in the same direction. The question is why the recovery is slow or close to non-existent especially in the well established economies? The Russian invasion of Ukraine led the UN, IMF, US and other European countries to put sanctions on Russia. The idea behind was basically to prevent the world from funding the Russian war. Now the crucial problem that has arisen is the shortage of fuel and other energy resources despite their heavy demand, which has resulted in inflation. Because of its necessity, oil trade cannot be compromised, the Gulf nations are selling oil at very expensive rates. But inflation alone is not the root for the global economic slowdown, the quandaries worsen because of a simultaneous stagnation in the economy, the term which we today know as "stagflation". Stagflation was first used in 1965 in the British parliament to define the complex situation of stagnation in the economy and simultaneous inflation. Due to a sudden increase in the cost of oil, the productive capacity of countries has reduced. Transportation costs of supplying materials and goods have also increased which is making products more expensive; factories and industries are terminating labours and cutting down on wages to compensate with the increasing production cost which is ultimately leading to higher rates of unemployment, lower rates of production, increased inflation and slowed economic growth.

Stagflation usually occurs due to big supply shocks and easy monetary policy, and it lasts longer than a recession because there is no definitive curve, and the central banks can't stimulate the economy by cutting interest rates since inflation is shooting up. The tools which are generally used in curbing inflation are ineffective in this scenario, which implies a longer discomfort in the global economy. Since the 1970s, this is the first time the global economy is witnessing stagflation. Hence, there is no hope for any economic developments in the year 2023.