China to lead world into moderate recession
Massive "helicopter money drop" is one way to mitigate a downturn.
WE believe that a moderate global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. The most likely scenario in our view for the next few years, with a 40 per cent probability, is that global real gross domestic product (GDP) growth at market exchange rates will decline steadily from here on and reach or fall below 2 per cent around the middle of 2016.
Growth is likely to bottom out in 2017 and start recovering again from late 2017 or early 2018. The output gap could be closed, meaning the world exits recession, in late 2018 or 2019.
The evidence for a global slowdown is everywhere. Global growth has been weakening since 2010. A modest pick-up in GDP growth in the developed markets (DMs) since 2012 is swamped by a sharp decline in emerging-market (EM) growth.
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