On a visit to Stockholm, Deutsche Bank chief international economist Torsten Slok has said that a recession by 2020 is likely and that it will hit Europe first.
Slok believes prolonged Brexit uncertainty – regardless of what happens at the end of March – is acting like a “wet blanket over the European economy”. Simultaneously, China’s slowdown is hitting German exports and concerns over US tariffs are weighing on investor sentiment.
Eurozone factory growth has stumbled in the past year and Slok sees no end to Europe’s misery. The European Central Bank will be forced to shelve any plans it may have for an interest rate rise later in the year, according to the economist.
European stock markets face a gloomy 2019 while Wall Street will most likely rally, although the fixed income market is continuing to create fragility. Slok forecasts a positive end to US-China trade talks, which will lead to a short-term upswing, saying that the latest drop on the stock market and in the PMI will force Donald Trump to find some sort of solution with China.
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