Invest
Are we on the cusp of a recession?
Models used to forecast market directions suggest the risk of a global recession in the next two years is low, but minor shifts in market performance could change that drastically, according to a global investment firm.
Are we on the cusp of a recession?
Models used to forecast market directions suggest the risk of a global recession in the next two years is low, but minor shifts in market performance could change that drastically, according to a global investment firm.
Last year saw many investors worry that “stuttering growth” in numerous countries and “plunging” commodity prices could prompt a recession (a period of poor performance typically indicated by two consecutive quarters of negative GDP growth), a recent report from Standard Life Investors noted.
“Although the worst fears of investors were not realised, and global economic growth has subsequently reaccelerated, the episode serves as a useful wake-up call,” the report said.
“It forces us to question where we sit in the global business cycle and – most importantly – when is the next recession due?”
Using a number of forecasting models, the asset management firm analysed the current market environment and found the chance of a global recession in the short term is slim, but cautioned that investors shouldn’t relax just yet.
“The modest risk of recession flagged by our models should not provide cause for complacency, especially for those investing on longer horizons,” the firm said.
“Our models have some predictive ability one and two years ahead, but their reliability fades as time goes on because the forces that bring cycles to an end are not always in view that far out and some recession triggers fall outside the scope of our framework.”
Additionally, the economists who put the report together found that only slight adjustments to market conditions were needed to dramatically increase the risk of a recession, with the most notable example being a single standard-deviation fall in year-on-year returns increased the probability of a recession on a three month horizon by 20 per cent.
Changes in a number of other variables, such as real residential investment and credit spreads are also likely to affect the possibility of a global recession, the report cautioned.
Standard Life Investments said that investors can feel confident about extending their investment horizons “for now”, but that they should keep an eye on the market moving forward to minimise their risk.
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
