Recession or "synchronized slowdown"? What the experts say


TORONTO – Two of the world's leading financial players are experiencing the risk of a global economic slowdown, but experts say there is no reason to believe that a complete recession is in the cards anytime soon.

Speaking Monday in Montreal, the president of the World Bank group David Malpass described the state of the global economy as "fragile", indicating the initial forecast of the World Bank that the global economy would grow in 2019 to 2 , 6 percent, its slowest pace in three years.

"We now expect growth to be even weaker than that, damaged by Brexit, the European recession and commercial uncertainty," he said. a transcript of his observations published on the World Bank website.

Kristalina Georgieva, the new general director of the International Monetary Fund, declared on October 1 that she expected global economic growth this year to be at its lowest level in almost a decade. The IMF is also cutting its forecasts for the global growth rate, which had forecast 3.2 per cent this year and 3.5 per cent in 2020.

"We expect slower growth in almost 90% of the world. The global economy is now in a synchronized slowdown," he said in a speech in Washington, DC.

However, there is a big gap between slowed growth and total recession. It is normal that global GDP growth rates fluctuate significantly from year to year. A recession – defined as a reduction in GDP for two or more consecutive quarters – is much rarer.

The last recession in the United States occurred between 2007 and 2009. Canada was in a recession in the first half of 2015, but did not feel the prolonged economic suffering that usually accompanies the recession at that time.


Canadian analysts say they expect the global slowdown in economic growth to also take place in Canada, but do not see the country or the world approaching a recession.

"The Canadian economy will continue to grow, albeit at a slower pace," Kip Beckman, chief economist of the Conference Board of Canada, told on Thursday.

He said that low unemployment, rising wages, lower mortgage rates and a renewal of the housing sector will help grow the Canadian economy, although they will not be enough to cause growth to stars.

"There is some good news in Canada, but we are certainly not looking for growth of over 2% for a while," he said.

Fred Lazar, associate professor of economics at the Schulich School of Business at York University, stated in an interview that the global economy that is slipping into a recession would probably require great international development, such as the conflict in the Middle East rising oil prices skyrocketing or unrest in Hong Kong is spreading to mainland China.

"There are many of these types of question marks around it. Is it likely that they will materialize? C & # 39; s always a possibility. I would consider it rather lean, though, "he said.

Lazar said he expects growth to slow in China, while Europe may be in a recession, but those two combined developments would not be enough to make the entire global economy contract.

"We are not on the precipice or we do not fall into the abyss. We are nowhere near," he said.

For his part, Beckman predicts "weaker growth … but not a global recession".

"I know a lot has been said about this, but unless the United States falls into a recession – which we don't see – I don't think there will be a global recession," he said.


Experts agree that a recession is a remote possibility at best, although virtually all forecasts for the world economy have been downgraded repeatedly over the year.

The main driving force behind these increasingly dark projections was commercial uncertainty. Several trade conflicts will result in the loss of about 0.8 percent of global GDP by 2020, said Georgieva on 1 October. This is much higher than what the IMF had previously considered a worse scenario.

"We are already shooting ourselves in the foot," he said.

"The results are clear. All lose in a trade war. "

It is the latest in a series of signs indicating that trade disputes are giving a legitimate tribute to the economy, both through direct impact and by creating negative reactions in financial markets.

The commercial dispute between the United States and China has increased the titles of recent months, but it is not the only international incident that contributes to slow growth at the global level. Japan and South Korea are stuck in their own trade war, Italy has just come out of a recession and could be headed for another, and no one knows what will happen as the Brexit deadline approaches at the end of the month.

"The geopolitical tensions are higher than normal," Beckman said.

"This is something simmering in the background that we will have to be aware of going forward and that is responsible for smaller growth."

This simmering could come to a boil next week as a Chinese delegation visits the United States to talk about trade. Whatever happens, economic leaders will follow closely – especially next week even when the IMF will publish its next global economic outlook.

With AFP files


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