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Policy
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Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
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G10 Markets
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Global Macro
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About Us
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI EUROPEAN MARKETS ANALYSIS: China Equities Lower Post CEWC
MNI EUROPEAN OPEN: Sharp Fall In China Bond Yields Continues
Gauging Recession Risks
Defining a recession and determining in real time whether or not an economy is experiencing in recession remains a hotly debated topic. Less contentious is the significance to the world economy of the US entering recession. Although China's explosive growth in recent decades has underpinned a shift in the balance of economic power and influence, the health of the US economy and cost of dollars remain key drivers of the global economic and financial cycles. With that in mind, we have taken a look at the likelihood of recession for the major developed and emerging economies when the US has experienced an economic contraction.
- To get a preliminary sense of recession coincidence, Fig 1 below indicates when an economy experiences negative economic growth in a particular quarter, with the mapping highlighting both the frequency of negative growth quarters and coincidences of recessions across economies. The global financial crisis and pandemic stand out as key triggers of near universal recessions across developed and emerging markets, while there are also a clear cluster of negative growth quarters for developed markets in the early 1980s and early 1990s during periods of aggressive monetary policy tightening.
- Specific recession definitions vary from the rule of thumb 'two quarters of negative growth' to measures that consider per capita income and more sophisticated dating procedures used by the NIESR and others. For the purpose of this exercise and to aid comparability, we define a recession as being two quarters of negative economic growth.
- Using quarterly data from the OECD for 38 countries (shown in the map below), we find that across all economies the likelihood of any particular quarter being identified as a recessionary quarter (using our definition) is 8% and is similarly 8% for developed economies and 7% for emerging economies.
- However, when the US experiences a recessionary quarter, the likelihood of any other economy also being in recession (using the entire data set) rises to 44% (44% for developed markets and 43% for emerging markets). Finally, given that recessions are not perfectly aligned, we look the frequency of recessions within one year of the US recording a recessionary quarter. On this measure, the likelihood of recession over the subsequent year rises to 60%.
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.