Global markets are betting on recession
Last spring, the number one risk was stagflation. Just three months later, the risk of recession is on everyone’s attention (a recession in the United States which has every chance of becoming a global recession due to the preponderance of the US economy). All international banks have corrected their predictions: the strategists of Goldman Sachs raised the likelihood of the US economy going into recession this year to 30%, analysts of TD Securities, a well-known Canadian investment bank, are more pessimistic and estimate a probability of 60% in the next twelve months. Market participants (those operating on the financial markets) are, on the other hand, slightly more optimistic. Only a third predict a global recession next year and 27% the following year (Russell Investment Survey of Bond Managers, July 8, 2022). The reality is that no one knows when a recession will occur because it is an extremely difficult scenario to predict. The only certain thing is that the US economy, for the moment, is not yet in recession (contrary to what some catastrophists claim).
“The situation is more worrying in Europe. The level of potential growth (which is a key indicator of future growth) it is much lower on this side of the Atlantic than in the United States. Public debt is a problem in many countries. In the end, Europe is located on the verge of an unprecedented energy crisis, which could cause part of its industrial base to collapse“commented Michele Sansone, iBanFirst Country Manager for Italy.” In this case, the question is not whether or not Europe will experience a recession in the short and medium term. It is a useless question. The problem is how Europe will manage to survive the winter without its factories being closed. We are facing a real and lasting risk of impoverishment of the Old Continent“.
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