Background and Causes
Recent developments in the global economy have led to increasing concern about a potential “hard landing,” meaning that the likelihood of a worldwide economic downturn within the next twelve months has significantly increased. This development is driven by several factors, including trade disputes and tariff increases.
Trade Disputes
The recent escalation of the trade war between the United States and other countries has severely impacted global economic prospects. The U.S. has announced high tariffs on imports from nearly all countries, leading to retaliatory measures from other nations.
Tariff Increases
JPMorgan estimates the likelihood of a global recession this year at 60%, as U.S. tariff hikes could act like a massive tax increase. These measures could worsen the business climate and disrupt supply chains.
Economic Impacts
Experts warn of a downturn in economic growth, higher inflation, and job losses in the U.S. and Europe. The International Monetary Fund (IMF) forecasts a reduction in global GDP by about one percentage point due to these measures.
Forecasts and Expectations
- Bank of America shows that investor sentiment has dramatically worsened. In April, 49% of surveyed investors expected a “hard landing” within the next twelve months – compared to only 11% in March.
- JPMorgan emphasizes that even after slight easing of measures, there may still be sufficient reasons to drive the global economy into a recession.
- Deutsche Bank: Economists expect Germany to face a third consecutive year of recession due to the tense trade situation.
Preparing for Market Fluctuations
Given these developments, investors should prepare for potential market fluctuations:
- Diversification of portfolios can help minimize risks.
- Close monitoring of economic policy decisions is crucial.
- Companies should adjust their strategies to deal with potential disruptions in supply chains.
Overall, many indicators suggest that investors need to brace for turbulent times and that strategic adjustments are necessary.