This cocktail of macro risks could cause downturn that ‘rivals’ global financial crisis: Deutsche Bank

U.S. investors are once again paying attention to the dark clouds gathering over the global economy, with reason to fear that the next big storm could be as damaging as the downturn that accompanied the global financial crisis a decade ago.

On a day when the S&P 500 SPX, -0.94% and Dow Jones Industrial Average DJIA, -0.87% were under pressure (though still up sharply from their late December lows), Peter Hooper, chief economist at Deustche Bank Securities issued a research report estimating the damage that may result if the three gravest threats to the global economy come to fruition.

Hooper points to a “significant escalation of trade tensions” between the U.S. and China; a hard Brexit, in which the U.K leaves the European Union with no trade deal in place; and a “sharp slowdown” in Chinese economic growth as the three major macro headwinds facing the global economy today, while arguing that if the worst-case scenarios for all three materialize in the coming months, “the world economy could face a downturn rivaling that which occurred during the great recession a decade ago.”

Leave a Reply

Your email address will not be published. Required fields are marked *