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World economy is headed for a slowdown, not a recession

By Andrew Rickard | March 30 2016 09:56AM

While RBC Global Asset Management (RBC GAM)'s investment strategy committee does not anticipate a worldwide recession, it does warn that economic risks have increased.

In its spring outlook report, RBC GAM notes that global economic growth has been sluggish recently. Although the report does not predict a recession, it says that there are an "unusually large number of downside risks and challenges" in the world. The report suggests that debt excesses, the natural resources price shock, the emerging-market slowdown, and imbalances in the Chinese economy all threaten to slow down growth, as do rising geopolitical risks and fresh worries about the banking sector.

Economic projections scaled back

"Our economic projections have been almost universally scaled back. The developed world is now expected to grow by just 1.5% in 2016 – putting it on track for the worst performance since 2013, and notably less than 2015 growth of 1.9%. The 2016 emerging-market outlook has also been lowered, with the year now also set for less growth than 2015," reads the report. "That said, there is a gaping difference between lowering growth forecasts and forecasting a recession. Despite rumours to the contrary, the world is not obviously descending into a recession right now."

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