Global recession concern growing

Momentum has ‘past its peak,’ IMF says Monday.

DAVOS, SWITZERLAND — The world economy absorbed more bad news Monday: The International Monetary Fund cut its global growth predictions for this year and next, saying “the balance of risks remains skewed to the downside” and momentum has “past its peak.”

What it means

Chief executives ranked a global recession as their number one concern for 2019, according to a survey of nearly 800 top business leaders around the world released Thursday by The Conference Board. Global trade threats came in second.

“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said Christine Lagarde, managing director of the IMF. “Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.”

The mood is noticeably more somber as government, business and nonprofit leaders from around the world are gathering her this week for the annual World Economic Forum.

Deceleration factors

Today growth is decelerating, especially in China and Germany, U.S. tariffs are starting to bite and the U.S. government is in the midst of the longest ever shutdown, which is starting to have a serious impact on the economy.

“I think there is anxiety. There are concerns the slowdown could be quite deep,” said John Hagel, co-chairman of Deloitte’s Center for the Edge. “The more we can show some progress and resolution of some trade disputes, that would help.”

As the economy slows, it’s easier for it to be knocked off track, many economists say.

What’s next

Most forecasters predict a cooling economy in the United States, China and many other parts of the world this year, but they don’t see an outright recession, which is defined as six months of negative growth. Still, an uneasiness exists about whether the slowdown will be modest or severe.