14 March 2016•Update: 14 March 2016
NEW YORK
There is a higher risk of global recession due to a slowdown in economic growth around the world, Morgan Stanley said Monday.
"Our growth forecasts are not inspiring," the U.S.-based multinational financial services corporation said in its Spring Global Strategy Outlook.
"Our economists are below consensus on global, EM [emerging markets] and DM [developed markets] growth and have raised their probability of a global recession within the next 12 months to 30 percent," it said.
Lower forecasts and expectations that the U.S. Federal Reserve (Fed) would make fewer interest rate hikes this year "lead us to materially lower our yield forecasts."
"A lack of policy tools, weak global growth, a still-strong dollar, ongoing questions on China’s currency policy, and rising European political risk all pose challenges to the market," it said.
The financial corporation also lowered its GDP forecasts for major economies. U.S. GDP projection was lowered to 1.7 percent for 2016, from 1.9 percent, and to 1.6 percent for 2017, from 1.8 percent. While the Euro area is expected to have a growth rate of 1.5 percent this year, instead of a 1.8 percent forecast; Japan's GDP is anticipated to increase by 0.6 percent in 2016, instead of 1.2 percent and the U.K.'s GDP was lowered to 1.7 percent from 2 percent for this year.
The 12-month projections of major stock indexes around the world were also gloomy The U.S.'s S&P 500 was cut to 2,050 points from 2,175, while MSCI Europe was trimmed to 1,500 points from 1,300.
The international benchmark Brent crude oil could average $30 per barrel in the first quarter of 2017, the financial firm said, and warned against the risk that it could fall as low as $25 a barrel on average on a bearish forecast.
Slower growth in global oil demand could delay the crude market's rebalancing until mid-2017.
"As long as markets are oversupplied, marginal changes in fundamentals do not tend to drive changes in oil prices," according to Morgan Stanley.
