[imagesource: Getty Images / AFP]

Are you bracing yourself?

The warning bells and seatbelt lights are flashing regarding the global economy as the odds of a severe recession keep climbing.

High inflation the world around, along with drastic rate hikes, plus the war in Ukraine is taking a massive toll, and data suggests that this presents downside risks to equities for the year ahead.

CNN notes, straight off the bat, that according to a probability model run by Ned Davis Research, there is currently a 98,1% chance of a global recession.

The only other times that the indicator has been this bleak was during the pandemic downturn of 2020 and during the Great Financial Crisis of 2008-2009.

The data has suggested that the global economy has been in a moderate slowdown even before the geopolitical fallout of Russia’s invasion of Ukraine, notes Markets Insider, with Ned Davis’s Global Recession Probability Model already in the high-risk zone.

Economists and investors are getting worried even as central banks ramp up their efforts to get inflation under control:

Seven out of 10 economists surveyed by the World Economic Forum consider a global recession at least somewhat likely, according to a report published Wednesday. Economists dialed back their forecasts for growth and expect inflation-adjusted wages to keep falling the rest of this year and next.

Given surging food and energy prices, there are concerns that the high cost of living could lead to pockets of unrest. 79% of the economists surveyed by the World Economic Forum expect rising prices to trigger social unrest in low-income countries, compared to a 20% expectation in high-income economies.

The data for the US, the world’s largest economy, doesn’t show conclusive evidence that it is currently in recession.

There are also hopes that the worst US inflation in 40 years will cool off in the coming months as supply catches up with demand.

Either way, down here in South Africa, we should probably start preparing ourselves.

[sources:cnn&marketsinsider]