With a growing body of forecasters slashing projections for 2022 world growth, the spectre of global recession is rising up again. Large parts of the global economy are weakening and could easily slip back into negative growth, especially in war-afflicted Europe. The Russian invasion of Ukraine has been bad timing for the world economy, coming at such a vulnerable point in the recovery from the Covid-19 pandemic. The impact of trade sanctions against Russia, the surge in global food and energy costs and the shock to global stability all pose strong headwinds, especially as the policy pendulum swings from super-stimulus to counter-tightening. It is a major headache for world policy leaders desperate for a return to normality but anxious to avoid making conditions even worse. For financial markets bingeing on a liquidity-fuelled spending spree, the global rally in risk assets could be on borrowed time. As far as the Group of 7 major economies is concerned, the outlook has deteriorated sharply as the Ukraine crisis has deepened. Britain seems likely to be the front runner for recession this year as it faces its biggest income squeeze in nearly 50 years and with consumer confidence close to an all-time low. The economy could slip into two successive quarterly falls in gross domestic product, consistent with a recession, as early as the third quarter. Germany’s economy could also be heading for serious trouble, especially if Russia raises the political stakes in the Ukraine war and turns off gas and oil supplies to Europe. With Germany dependent on Russia for around 55 per cent of its natural gas needs , German and European industry could be thrown into major disarray. This would risk a catastrophic collapse in economic output. If the European economy goes into recession, the world will be in serious jeopardy as global trade flows suffer and financial confidence starts to fold. It means a hard landing for the world economy as consumer spending, business investment and export orders begin to buckle under a wave of rising uncertainty. It is no wonder that the International Monetary Fund recently downgraded its April forecast for global GDP growth in 2022 to 3.6 per cent , from its 4.4 per cent estimate in January and the 4.9 per cent projection last October. Considering the global uncertainties, further downgrades must be expected. It could all add up to a perfect storm for the global economy, especially if the Federal Reserve steps up its campaign to stop US inflation. Headline US consumer inflation hit 8.5 per cent in March, leaving the Fed seriously behind the curve in terms of what is needed to keep inflation risks battened down. The current benchmark Fed funds rate is only 0.5 per cent . March data shows US inflation woes could be near their end In 1980, when US inflation peaked at 14.8 per cent, the Fed went into hyperdrive to stamp it out by raising its key policy interest rates to 20 per cent. The move triggered a recession in the United States and caused deep turmoil for global markets. The Fed does not seem to have a lot of scope in the current circumstances. Even if it tries to raise the Fed funds rate back to a more moderate 3 to 5 per cent range, it could put the global economy and world financial markets into a serious stall. The Fed might have to tone down its tightening message and hope the inflation spike soon passes, but the markets will not be too impressed. Given the choice between higher interest rates or higher inflation, global markets are living on borrowed time, especially with stock market valuations looking expensive based on relative fundamentals. The Shiller S&P 500 price-earnings ratio might have moderated in recent weeks, but it is still running close to its recent cyclical highs. With the pessimistic end of market forecasts reckoning on a 75 per cent chance of a US recession in 2022, what can policymakers do to mitigate the risk? US President Joe Biden needs to get his skates on implementing his fiscal stimulus plans to rejuvenate the economy. It is not just the US, though. The world needs to step up global fiscal reflation before it is too late. Without it, there is a 50:50 chance of global recession in 2022. David Brown is the chief executive of New View Economics