The financial markets enter the final stretch of the year with their eyes set firmly on the trade war and Brexit, meaning that the optimism surrounding the favorable resolution of both matters could be the stimulus that the world economy needs to regain momentum.
This report presents an analysis of those global shocks, most of low probability, which may have severe effects on the economy. The balance of risks continues to be tilted to the downside due to trade tensions (impact on China) and increasing probability of recession in the US.
The risk that the main developed economies are moving towards a regime of reduced economic growth in the medium term has once again gained relevance in recent months. It has been driven by the increase in the probability of recession in the United States and the eurozone, and the relapse of inflation expectations and long-term interest rates in both regions.