Recession latest publications
The world is experiencing the deepest recession in the last hundred years. The IMF estimates that the global economy will contract 4.9% in 2020. Many countries will have contractions in the second quarter of this year of between 30% and 40% at annualized rates.
Our forecasts have been revised to incorporate the macroeconomic impact on the Peruvian economy of the measures to contain the COVID-19 outbreak. As a result, we estimate that GDP will contract between 5% and 8% in 2020, with a downward bias. A significant rebound will take place next year.
This report presents an analysis of those global shocks, mostly of low probability, which may have a severe impact on the economy. Short-term risks have diminished on the back of easing trade tensions and interest rate cuts, but concerns on structural issues remain high (de-globalization and climate change).
The paper presents a quasi-historiographical or “narrative” analysis of the most critical developments occurring prior to and through the last nine recessions in light of Minsky’s theory of financial instability.
Probability of recession in 12 months at one-year lows (30%). Financial conditions remain solid after Fed “mid-cycle” adjustment. Strong household finances supporting consumption.
Models suggest 70% probability of recession within 24 months. Increased weakness in global growth. Policy uncertainty whipsawing with trade tensions. At times, key financial markets showing signs of panic-like conditions.
A possible recession in the US economy has led to a change in the language and direction of the monetary policy of major central banks around the world. The signals emitted by the global economy produced a risk scenario that was reflected in the purchase of safe-haven assets.
Baseline growth forecast unchanged, but risks tilted to downside. Model-based recession projections suggest probability around 75% over the next 24-months. Mixed signals from labor market indicators. Downside risks to inflation moderating.