Indicators point to an increased risk of recession

ON EUROPE

Looking ahead we believe we can see some indicators pointing to an increased risk of an upcoming recession in Europe. Overall the risk for European growth is on the downside, with several indicators pointing at a hard economic landing.

Worryingly for investors many of the leading economic indicators are consistent with a hard economic landing scenario and possible recessionary scenario. We have seen tighter credit supply conditions as revealed in the ECB lending survey and also widening credit and banking spreads have given further rise to concern. This is all combined with the latest sharp slowdown in M1 money growth. In global terms GDP growth is more threatened with potential hard landing scenario for the Chinese economy. The sluggish growth of developed markets combined with possible currency appreciation could sev...