Economists at Citigroup recently concluded that the probability of a global recession is already high and rising. A note released by a team of Citigroup economists stated that quote in our view, global growth is at a highly precarious point, after two to three years of relative calm.
The long standing fragilities in the world economy relate to the structural and cyclical slowdowns in China and its unsustainable exchange rate regime, the excessive level of debt across many countries and sectors and ongoing regional and geopolitical uncertainty close quote. As reported by Bloomberg, when these economists adjust for what they call true Chinese growth, the Citi team concludes that global growth might have been as low as two percent year-over-year during last year’s final quarter.
That represents the slowest rate of world output expansion since the euro zone recession of twenty twelve and twenty thirteen. If growth remains at such depressed levels, that would qualify as a global recession according to their measures.
According to the economists, to avoid a recession, the world requires actions similar to those taken by Japanese policymakers recently, including a combination of easy monetary policy, fiscal stimulus and structural reform.
