Central banks around the world are determined to do whatever it takes to fight inflation, including pushing the world economy into recession. But a few things could diminish the chance for that to happen.

The chorus of economic analysts, investment strategists, and think tanks calling for a global recession in 2023 is growing bigger and bigger. For example, in a report featured in Bloomberg News over the weekend, the Centre for Economics and Business Research predicted that higher interest rates would likely push the world economy into a recession next year.

"The battle against inflation has yet to be won," said the report. "We expect central bankers to stick to guns in 2023 despite the economic costs. The cost of bringing inflation down to more comfortable levels is a poorer growth outlook for several years to come."

Central bankers' determination to fight inflation heightened last week when the Bank of Japan joined its peers by raising its benchmark rate, ending a prolonged period of near-free money.

A global recession is bad news for both Main Street and Wall Street. For Main Street, a global recession means declining business revenues, failures, layoffs, and rising unemployment.

For Wall Street, a global recession means a lower top and bottom line, which leads to lower valuations. Thus, steep declines were seen on Wall Street in recent months, as traders and investors usually anticipate rather than follow economic news.

Still, a few things could save the world economy from a recession in 2003.

One of them is an acceleration in the decline of inflation seen in recent months. It could be caused by the softening of aggregate demand and easing supply chain constraints.

For instance, the softening of demand has left many retailers like Target, Costco, Nike, and Lululemon with excess inventories, which could lead to lower prices as these retailers cut prices to eliminate these inventories. In addition, a decline in home prices will ease pressure on housing costs, which account for 42.36% of the Consumer Price Index (CPI).

Then there's the precipitous decline in the Baltic Dry Index (BDI) from 5400 in October to 2021 to 1500 recently. It could lower transportation costs, a critical component of the prices of goods.

And there's the easing of oil prices, from $122 per barrel six months ago to $80 recently, easing the cost of energy, another critical component of the cost of living.

An acceleration of the decline in inflation could force central banks to pause interest rate hikes sooner rather than later. Thus, averting the prospect of a full-blown world recession.

Michael Ashley Schulman, the chief investment officer of Running Point Capital Advisors, sees a couple more scenarios that could avert a global recession.

One is a solid restart to China's economy after the Lunar New Year celebrations.

"If China continues to stimulate and reopen its economy, global commodity demand should increase, and simultaneously, finished goods prices should decrease as supply chains normalize," he told International Business Times.

"Some of China's recent moves to stabilize their real estate mess are reminiscent of the U.S. Troubled Asset Relief Program program during the great financial crisis of 2008-09 that stabilized the financial system in the U.S."

Then there is the prospect of ending Russia's war against Ukraine. It has been an innumerable strain on all economies involved and incalculably inflationary.

"A peaceful resolution to the terrible conflict would decrease risks, lift stock markets, and make global financing cheaper," Schulman said.

"It will end a European migrant crisis, lessen energy prices, and increase food security — results that could help mitigate recessionary fears."

According to Peter Schwartz of Jibe Consultants, the most crucial factor that could save the world economy from a recession in 2023 is to believe it's not a foregone conclusion and therefore not make a recession a self-fulfilling prophecy.

"This is a similar concept to President Franklin Roosevelt's phrase during the Great Depression 80 years ago, 'The only thing we have to fear is fear itself,'" he said.

Inflation