Mumbai: Although cautioning that recession fears should be taken seriously, global economic research firm Oxford Economics said in a recent report that “our baseline assumption is still a modest growth slowdown from here.”
The prominent research firm said that with China no longer acting as the spender of last resort, it’s vital that governments in advanced economies stand ready to pick up the slack.
Oxford Economics, however, said it assumes that further major adverse shocks won’t materialise and that insurance policy moves by central banks will stop a plunge in investment and households from panicking.
“In the previous two cases, global growth fell to around 2.5 per cent — around the rates seen in Q2 this year — only to then rebound. Our baseline forecasts assume a similar mini-cycle, albeit with only a modest growth rebound,” the research report said.
“Fears that the global economy is heading into a recession are rising. But while we cannot ignore the risk that a recession could be brewing, our baseline assumption is still a modest growth slowdown from here,” it added.
The report further said that the global economy is in a similar position as in 2012 and 2015, as mounting uncertainties dampen growth.
Describing the slowdown, it said that “this time trade tensions are a high-profile culprit rather than the possible collapse of the euro-zone or a China hard landing.”
