According to the Organisation for Economic Co-operation and Development (OECD), the world will face a ‘significant growth slowdown next year but will avoid a global recession’. We suspect this will prove as accurate as most OECD forecasts, which is not very accurate at all. It is our belief that it is close to impossible for the global economy to avoid recession, bearing in mind the magnitude of required interest rate rises from central banks to tame runaway inflation.
Of course, it is these very same central banks that are largely responsible for inflation in the first place, so our argument presupposes they’ll make a worthwhile attempt at clearing up their own mess. If they don’t, rates may not increase as much as they should but then, inflation will continue to be a serious problem. It’s not a palatable choice; stagflation or recession but that’s what happens when years of appalling judgement pretty much removes all acceptable policy options.
We are not expecting any help from the global economy. Consequently, our investments will have to look after themselves but then, we only wish to own enterprises of substance in any event.
