Global recession is testing economic resilience

Our baseline is for a global recession with global growth being well below 2% this year. We expect growth to decelerate quite abruptly across the board with a recession in Japan and the Eurozone. The coronavirus outbreak in the EU and US is still intensifying.

Key takeaways

• We expect a global recession this year and no "V"-shaped recovery given the global coronavirus outbreak, tightening financial conditions and the weak economic resilience to start with
• A number of G7 economies will see a recession, particularly Japan and the Eurozone
• The risk of both a US recession and a China hard landing has increased to a very high 40%
• We foresee further monetary easing across the board, though it will unlikely offset the economic disruption
• US 10-year yields are likely to remain below 1% until end-2021 and are quite likely to drop subzero temporarily
• Balance of risks remains tilted to the downside. Traditional policy tools make it much more difficult to manage the common global supply and demand shock