Recession Monitor: How close is the world economy to a crisis that will hit households hard?
The base scenario remains positive, although with greater structural fragility. Photo: iStock
TL;DR
- The global economy is expanding but more vulnerable to external shocks, especially energy price increases due to the Middle East conflict.
- An adverse scenario with oil prices above $140/barrel could lead to a recession.
- Consumers are highly exposed to rising energy prices due to low savings, impacting their spending capacity.
- The labor market shows signs of cooling, with a slowdown in hiring, posing a risk if layoffs increase.
- While immediate recession indicators are not flashing red, the probability has risen to 30%.
- The duration of the conflict is a key determinant, potentially prolonging high energy prices and affecting supply chains, particularly in technology sectors like semiconductors.
- Financial market corrections could impact high-income household spending.
- The global economy is showing signs of wear, with narrowing margins for error amidst persistent geopolitical risks and cooling investment.