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A mild global contraction is coming

By Nouriel Roubini

27 Jun 2023 · 4 min read

informed Summary

  1. There are four potential scenarios for the global economic outlook, ranging from a "soft landing" where inflation is brought back to 2% targets without a recession, to a "hard landing" where achieving 2% inflation requires a severe recession. A fourth scenario could see central banks allowing for above-target inflation, risking a wage-price spiral.

NEW YORK – There are currently four scenarios for the global economic outlook. Three of these entail potentially serious risks with far-reaching implications for markets.

The most positive is a “soft landing,” where central banks in the advanced economies manage to bring inflation back down to their 2% targets without triggering a recession. There is also the possibility of a softish landing. Here the inflation target is achieved, but through a relatively mild (short and shallow) recession.

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