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The risk of a global recession has ‘significantly increased,’ strategist warns
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Loading...A slew of global developments are convening to threaten economic growth, according to one investment manager, who believes that the risks of a recession next year have now “significantly increased.”
Global growth stood at 3.8 percent in 2017 and it is set to add another 3.9 percent this year and the next, according to forecasts by the International Monetary Fund (IMF). But, the escalation of trade tensions, coupled with other factors, could reverse this trend, Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC’s “Squawk Box Europe.”
“I think the risk of a global recession in 2019 has significantly increased,” he said.
“We have normalization of monetary conditions, that’s one thing, so we are in a late stage environment. Then we have this escalation in tariffs and trade … We have things like Brexit. All of these things lead to losses of investment confidence and I mean real economic investment confidence,” Wiitman warned.
Central banks have started ending to their crisis-era accommodative policies, with the U.S. Federal Reserve, in particular, increasing interest rates — which are set to translate into higher mortgage payouts and less available income for consumers.
At the same time, the U.S. has imposed new tariffs against global trade partners and these nations have retaliated. The trade tensions are set to continue with Europe currently preparing for new duties on its cars. IMF Managing Director Christine Lagarde told CNBC last month that the trade tensions are the “biggest” risk for economic growth in the euro zone.
Source: CNBC
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