Soft landing, hard landing or recession? The question torments governments and analysts around the world and the answers are not all optimistic.
In fact, given the euphoria caused by central banks’ decision to cut interest rates, the glass of the global economy may be – or become – more half empty than half full. And the alarm bells are increasingly ringing on both sides of the Atlantic.
The first threat is geopolitical tension. This is the threat once again highlighted by Jamie Dimon, CEO of JPMorgan and investment banking guru, who warned a year ago that the greatest danger to the global economy is the multiple outbreaks of armed conflict.
“My focus is on geopolitics, which can determine the state of the economy,” he told CNBC India yesterday. “Geopolitics is getting worse, not better,” he added, referring mainly to the escalating war in the Middle East, noting: “There is a possibility of accidents in energy supplies. God knows if other countries will get involved in the conflict.” At the same time, he positioned himself on the “cautious” side regarding the dynamics of the American economy: “In the long term I am optimistic,” he said, “but in the short term I am more skeptical than those who say everything is going to be great. The markets are evaluating the data as great. Put me on the cautious side of the story.”
In Europe, which lies next to the battlefields, the signs are even louder after successive crises and competitive sluggishness in terms of investment. The S&P Global survey yesterday revealed a shocking recession in the euro zone’s private sector in September, with manufacturing sliding into an even deeper recession and services entering a sharp slowdown.
Closer to home, the Bank of Greece has also sounded the alarm about the consequences of a possible worsening of the geopolitical crisis in Ukraine and the Middle East. By warning, for the umpteenth time, of the long-term risk to debt sustainability, recommending “fiscal vigilance”.
All this is not the product of a meeting of the… Drs Doom of the planet. They are the elements of a complex and difficult reality, whose awareness is a basic condition for overcoming challenges.