ALARMING PREDICTIONS – What precautions should we take?

Lhe US and European economies are slowing sharply as recession risks grow.

News like this comes to light daily. Hyperinflation, recession, stock market crash, dollar devaluation, food shortages, transportation bottlenecks, and more rate adjustments.

But what is the truth in these predictions?

They are all based on two factors: the resurgence of COVID-19, especially in China, and the war between Russia and Ukraine that seems to have no end, both creating a perfect storm.

If the war ends in a few months, all those predictions collapse, even if COVID continues to cause setbacks. But if the war drags on indefinitely, some of those predictions could inevitably happen in the short term.

For example, the FED in its last rate hike said it will make as many rate adjustments as necessary to bring down inflation. However, I think that Americans will have to live in the future with inflation between 3.5%-4% and forget about the 1.5%-2% that prevailed for years.

And what about the economy? The Fed made it clear that a global recession is highly likely.

And recession is synonymous with unemployment, poverty and more deficits and debts, because if the war intensifies and there are more cuts in the supplies of raw materials, the efforts of monetary policy to control inflation will be neutralized and from there to the cataclysm there is a step.

Is there awareness of all this?

That is precisely the biggest problem. Many believe that all these predictions are alarms that will take them with the wind, while consumerism continues to grow and pressure prices.

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For my part, I do not believe that so many brilliant minds are mistaken and speak of a bleak picture that no one will escape, without having a basis for it.

Meanwhile, the Dominican government must continue to freeze fuel prices, increase social assistance, regularly review the monetary policy rate to prevent capital flight and, if necessary, raise public debt by 1% of GDP in 2022 (approximately 60 billion) to assist the most unprotected for the rest of the year.

There is no other way to wade through the crisis with the least possible damage, as long as the engines that drive our economy, even if they slow down, do not stop to maintain the macroeconomic stability that we enjoy today, clouded by imported inflation that weighs on our pockets from town.



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