Davos Attendees Doubts Global Recession Will Take Place

The global economy is facing a slowdown at the start of 2019 but not a recession, according to economists, investors, and bankers attending the 2019 World Economic Forum in Davos, Switzerland.

They made their analysis even as the financial markets slid these past months. The S&P 500 Index recently dropped on worries that the U.S. and China could fail to reach a resolution to their trade wars. Brexit and the U.S. government shutdown raised investors’ concerns.

Slowdown, But Not Recession

For Philipp Hildebrand, vice chair of BlackRock, the world’s largest asset manager and a former Swiss central banker, the odds of a recession are limited, adding that although the world economy is slowing, it is still growing.

Hildebrand echoed the stand of International Monetary Fund’s half-glass-full attitude when it forecast in its recently released outlook that 2019 will see global economic growth of 3.5%, the softest since 2016. This figure is down from 3.7% in 2018. But even so, the organization kept its estimates it made in 2018 for the U.S. and China. It also predicted a slight pickup all over the world in 2020.

While IMF Managing Director Christine Lagarde admitted that “risks are rising” and the world economy is growing slower than expected after two years of robust expansion, she maintained that global recession would not take place.

On the Contrary…

Meanwhile, Gary Shilling, an independent economist, viewed otherwise, stating a “death by a thousand cuts” of the global economy 2019. The “thousand cuts” include Federal Reserves’ raising of interest rate, which it recently did and fall in stock prices, which took place before Christmas.

Shilling also cited the dismal global economic indicators; sliding commodity prices and the trade war between the U.S. and China, wherein both countries called for a truce as of this writing.

Shilling was well-known for warning investors years before the 2007-2009 global financial crisis that the housing bubble would burst and would significantly impact the entire economy. He also believes that economists and policymakers are very complacent even on these red flags.

Many Americans shared the Shilling’s pessimistic view about the economy. A recent Gallup poll revealed that 48% of Americans say economic conditions are worsening in January, up from 45% in December and 36% in November.