The world seems headed for a mild output contraction

livemint.com:

There are currently four scenarios for the global economic outlook. Three of these entail potentially serious risks with far-reaching implications for markets. The most positive is a ‘soft landing,’ where central banks in advanced economies manage to bring inflation down to their 2% targets without triggering a recession.

There is also the possibility of a ‘softish landing.’ Here the inflation target is achieved, but through a relatively mild recession. The third scenario is a ‘hard landing’, where returning to 2% inflation requires a protracted recession with potentially severe financial instability (such as more bank distress and highly leveraged agents suffering serious debt-servicing difficulties). If the effort to tame inflation triggers severe economic and financial instability, a fourth scenario becomes possible: central banks wimp out and allow for above-target inflation, risking a de-anchoring of inflation expectations and a persistent wage-price spiral.

As matters stand, the eurozone is already in a technical recession, with gross domestic product (GDP) having fallen in the fourth quarter of 2022 and the first quarter of 2023, and with inflation still well above target. The UK is not yet in a recession, but growth has slowed sharply and inflation remains stubbornly high (above the OECD average). And the US suffered a sharp slowdown in the first quarter even as core inflation remained high (though it is falling, it remains above 5%).