Recession
It’s a weak economy in 2020 or, worse, a recessoin, says Moody’s chief economist. | Source: Shutterstock.com

Financial intelligence and analysis firm Moody’s Analytics is the latest to inject itself into the global economic recession debate further adding to the jitters.

Per the firm’s chief economist, Mark Zandi, the risks of a global economic recession are currently ‘awfully high’, according to CNBC. And even if an outright recession is avoided, Zandi warned, the global economy will be weaker in next one year to one and a half years:

I’ll say this also: Even if we don’t have a recession over the next 12-18 months, I think it’s pretty clear that we’re going to have a much weaker economy.

Monetary stimulus key to preventing global recession

Avoiding a global recession, according to Zandi, will require central banks to continue their monetary stimulus efforts. On a country-by-country level, the UK will need to reach a withdrawal agreement with the EU, if a global recession is to be avoided.

Additionally, the Sino-US tariff war will need to be de-escalated or at least not escalated. This is not Zandi’s first time to warn that an escalation in the trade war would harm the global economy.

With regard to fiscal stimulus, Zandi has lowered the chances in some of the world’s major economies. Per Moody’s Analytics’ chief economist, the U.S. Congress is unlikely to pass around another round of tax cuts as it will be embroiled in the impeachment inquiry into President Donald Trump. Zandi also cited Germany as lacking the political will to roll out fiscal stimulus measures.

Zandi’s comments come barely days after the International Monetary Fund also added to the fears of a global economic recession. Earlier this week, the IMF cut the global economic growth forecasts to the lowest level in a decade. The Fund blamed the Sino-US trade war, a no-deal Brexit and other factors for the lowered outlook.

Blame geopolitics if a recession occurs: Jamie Dimon

On Tuesday while releasing JPMorgan’s third-quarter results, CEO Jamie Dimon warned of a recession ahead.

Moody's Analytics

Dimon fingered the trade war as the likely cause though he pointed out that the US consumer confidence was still high:

It does look like geopolitics, particularly around China and trade, are reducing business confidence and business capital expenditure … The consumer is not under strain. The consumer is doing fine.

Recession fears were also expressed last week by the World Economic Forum in its yearly Global Competitiveness Report. On a more comforting note, however, the report noted that the coming recession will be less severe than the 2008/2009 Great Recession.

This article was edited by Samburaj Das.

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