Global economic growth is stagnating in 2022, but is that a recession? – The Peninsula

Global economic growth is stagnating in 2022, but is that a recession? – The Peninsula

Doha: A lot has been written in recent months about whether the US, Euro area and global economies are heading for a recession. It is clear that the global economy is facing several material headwinds and experiencing a sharp slowdown in 2022. It is less clear whether we will actually see a global recession.

This week, we define and assess the risk of recession in the US, Euro area and global economy before concluding what this could mean for the economic outlook.

The accepted definition of a recession is two consecutive quarters of negative GDP growth. However, global GDP growth is so robust that this condition is rarely met and many analysts loosely refer to a sharp slowdown as a recession.

First, we consider the US economy, which is slowing rapidly and makes the idea that the Federal Reserve (Fed) can engineer a soft landing optimistic, at best. Leading indicators, derived from PMI surveys, equity markets and US Treasury markets, are all pointing to a deterioration of US macro conditions. Indeed, slower inventory accumulation has already led to two quarters of contraction in US GDP in Q1 and Q2 2022.

While this could be interpreted as a technical recession, the US Bureau of Economic