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Global recession? No need to panic just yet

32 0 10

As we enter the final quarter of 2018 and look back over the past months, it is quite clear that this year in markets has been characterised mostly by concerns and fear. This is a stark contrast to 2017, which had mostly been about hope.

The surge in global growth that we witnessed in 2017 has moderated this year, and this has exposed worrying weaknesses in some economies.

Faith in US economic strength spreading around the globe has been shaken by the US-China trade war. Worse, fears over an imminent end to this mature economic cycle are increasingly palpable.

However, looked at rationally, these worries still seem premature. The current period of above-trend global growth should extend well into 2019, and an actual recession, in all likelihood, should still be some way off. Nevertheless, there is now little slack in the global economy, and policy rates are likely to tighten further, even in the face of rising geopolitical tensions.

From the perspective of growth alone, the outlook is still quite positive. US data in particular shows meaningful domestic strength and European growth is also coming back strongly, after weakness earlier in the year. Japan, too,........

© South China Morning Post