- A shorter and shallower mild recession is likely
- Central banks to stay the course on fighting inflation
- China’s reopening a boost to the global economy and oil demand
- Enticing valuations to ramp up M&As
China reopening hopes to safeguard global economy; inflation a “poison”. As world leaders met and concluded the World Economic Forum in Davos, discussions were centred around recession, China reopening, global debt pile, inflation, and climate issues. While making a call on recession is tricky, sentiments were unanimously more upbeat than in the same meeting last May when the Russia-Ukraine crisis started. China’s reopening hopes and an impending end to the global hike cycle this quarter also cushioned earlier global hard landing fears. Despite the cyclical hopes, frustration was apparent over structural issues, namely deglobalisation, and the lack of real climate actions.
Between a rock and a hard place, central banks raised concerns about inflation risks which they are determined to “stay the course” (on the fight against it), while feeling more hopeful about the global economy. Below, a key takeaway:
A mild recession. CEOs of major global banks remain optimistic about a “mild” recession which is going to be shorter and shallower than previously thought. Despite ongoing geopolitical and economic uncertainties, the business environment remains resilient – unemployment is low and companies are still investing. China's reopening after a multi-year Covid-related shutdown would help jumpstart the global economy. Gloom about the economy was seen in the rear-view mirror – confirming our view that many negatives have already been priced in.
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