A global recession is coming, economists warn
Worldwide economic slump could set in by summer, unless Trump changes direction
The escalating trade war between the U.S. and nearly every single one of its major trading partners has sparked a flurry of predictions and concerns that a global recession could be around the corner.
And economists who spoke to CBC News say one is virtually inevitable, unless we see a big pivot from the U.S. soon.
"I don't know how we would avoid it," Mark Zandi, chief economist at Moody's Analytics, told CBC News's Power & Politics on Monday.
"This is a pretty dark scenario, both for the U.S. and, by extension, Canada and the rest of the world."
In the wake of U.S. President Donald Trump announcing sweeping global tariffs last week, the brokerage firm J.P. Morgan put the chances of a global recession at 60 per cent, up from 40 per cent at the end of March.
"We haven't seen this type of tariff trade war in a 100 years," said Moshe Lander, senior lecturer of economics at Concordia University, referring to when the U.S. doled out tariffs after the stock market crash of 1929.
Those tariffs backfired when Washington's trading partners retaliated, he said.
'Entering one as we speak'
A recession is traditionally defined as two consecutive quarters of losses in a country's GDP. In a global recession, those losses would occur across multiple economies worldwide, says Tu Nguyen, an economist with RSM Canada.
There's no "set-in-stone" definition for how many countries need to be in turmoil, she said, but with major economies including China and the European Union all facing trade uncertainty amid heavy U.S. tariffs, the writing on the wall is clear.
"If the U.S. does not change its policy stance on tariffs… we would expect a recession to be defined in the next six months," Nguyen said.
"I think it's reasonable to say that we are entering one as we speak."
Zandi predicts that the U.S. would begin to feel the effects of a recession by June or July if Trump "doesn't find an off-ramp."
The clash between the U.S. and China, the "two largest economies on the planet by orders of magnitude," is one of the biggest hurdles, he said.
'Brace for impact' as global recession likely under tariffs: Moody's chief economistAfter China matched Trump's tariffs, he levied even more — meaning that, when those latest tariffs kick in on Wednesday, imports from China will be a stunning 104 per cent.
"If both countries keep raising their tariffs tit for tat, we're going to end up with very little trade between the two countries and the fallout from that is just going to be very difficult to overcome," Zandi said.
Global vs. national recessions
A global recession isn't felt equally across all countries. For instance, during the global financial crisis of 2008, Canada went through a period of reduced economic activity, but "did quite OK, all things considered," Nguyen said.
However, Canada's positioning in this upset isn't looking good.
A man reads a newspaper outside the Bombay Stock Exchange after Trump's tariff plan announcement, in Mumbai, India, on Friday. (Francis Mascarenhas/Getty)
Andrew DiCapua, principal economist with the Canadian Chamber of Commerce, says that while Canada appeared to have been spared by last week's tariffs, "the reality is, if the U.S. slips into recession, Canada and Mexico will inevitably feel the worst of the impact, given how integrated our economies are."
Billionaire Trump ally warns tariffs could trigger ‘economic nuclear winter’Exactly how global tariffs will impact Canada's GDP or job market won't be apparent for months, although March saw a decrease of 33,000 jobs amid tariff fears, reversing the growth seen at the end of last year.
But economists predict that as global tariffs make goods less accessible and more pricey, consumers will retreat from purchases and investments, dampening demand and increasing the likelihood of layoffs.
"Layoffs are already starting, especially in sectors closely tied into U.S. supply chains, like autos, and we're beginning to see that reflected in labour market data," DiCapua said.
Reduced hiring and more businesses going under will follow in a recession, making it harder to get raises or change jobs. Meanwhile, life will get more expensive.
"The typical American household will have to spend $2,100 [US] more a year to buy the same goods as they are today," if things don't change, Zandi said.
There's still a way to avoid a global recession, but that would depend on the U.S. drastically reducing or eliminating its tariffs entirely.
"The off-ramp to avoid this has to come from the U.S.," Nguyen said, adding that speed is of the essence.
"The longer this goes on, the more layoffs will happen, the more factories would just shut down because they can't operate under the new tariffs' rules."
The Trump administration has scheduled talks with South Korea and Japan, and Italian Prime Minister Giorgia Meloni is due to visit next week. But right now, all country-specific tariffs are moving forward.
"The important thing to remember is that this is entirely self-induced by the U.S.," Nguyen said. "It's not something that we were blindsided by like the COVID-19 pandemic, for example. But it's having an impact on the entire world."
A stock broker calls for prices on Oct. 9, 2008, in London, amid that year's global economic meltdown. (Peter Macdiarmid/Getty)
ABOUT THE AUTHOR
With files from Reuters
Power & Politics | Campaigns confront a global tariff shock and a defiant Trump
93 Comments
Mark Zandi
Mark Zandi is chief economist of Moody’s Analytics, where he
directs economic research. Moody’s Analytics, a subsidiary of Moody’s
Corp., is a leading provider of economic research, data and analytical
tools. Dr. Zandi cofounded Economy.com, which Moody’s purchased in 2005.
Dr. Zandi is on the board of directors of MGIC, the nation’s largest
private mortgage insurance company, is the lead director of PolicyMap, a
data visualization and analytics company used by policymakers and
commercial businesses, and is a director of the Coleridge Initiative, a
nonprofit that facilitates the exchange of data across governments.
He is a trusted adviser to policymakers and an influential source of
economic analysis for businesses, journalists and the public. Dr. Zandi
frequently testifies before Congress and conducts regular briefings on
the economy for corporate boards, trade associations and policymakers at
all levels.
Dr. Zandi is the author of Paying the Price: Ending the Great Recession
and Beginning a New American Century, which assesses the monetary and
fiscal policy response to the Great Recession. His other book, Financial
Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid
the Next Financial Crisis, is described by The New York Times as the
“clearest guide” to the financial crisis. Dr. Zandi is host of the
Inside Economics podcast.
Dr. Zandi earned his BS from the Wharton School at the University of
Pennsylvania and his PhD at the University of Pennsylvania.
Canada
Richard Hunt
VP – Sr. Credit Officer/Manager
Richard.Hunt@moodys.com
Andrew DiCapua
Principal Economist
Andrew has spent his career as an economic storyteller, distilling signal from the noise. At the Chamber, he’s focused on helping businesses navigate changing economic conditions. Andrew is responsible for developing the Chamber’s economics and forecasting capabilities. He contributes to the Chamber’s economic outlook and regularly conducts economic analysis on developments impacting Canadian business. Andrew has led many engagements to support the business community in shaping policy discussions to drive economic growth.
Before joining the Chamber, Andrew worked at Export Development Canada (EDC), where he forecasted the Canadian economy and Bank of Canada’s monetary policy. He also oversaw the planning of EDC’s economic publications. Andrew’s career began in Ottawa as a trade consultant, where he advised international companies on trade regulations and represented clients in trade disputes before the Canadian International Trade Tribunal.
Andrew holds a Bachelor’s degree (Honours) in Economics from Queen’s University, where he was an active member of the campus community.
Staff Directory
Ottawa | Montreal | Toronto | Calgary
Executive Office
Candace Laing
President & Chief Executive Officer
Gayla Brock-Woodland
Chief Operating Officer
Marion Fekete
Senior Manager, Executive Office
T: 613.238.4000 (2302) | mfekete@chamber.ca
Policy & Advocacy
Matthew Holmes
Executive Vice President, International & Chief of Public Policy
Kathy Megyery
Senior Vice President, General Manager, Quebec
T: 514.866.4334 (4220) | kmegyery@chamber.ca
Catherine Fortin Lefaivre
Senior Vice President, International Policy & Global Partnerships
T: 613.238.4000 (2171) | cfortin@chamber.ca
David Pierce
Vice President, Government Relations
T: 613.238.4000 (2344) | dpierce@chamber.ca
Ulrike Bahr-Gedalia
Senior Director, Digital Economy, Technology & Innovation
T: 613.238.4000 (2251) | ubahr-gedalia@chamber.ca
Jessica Brandon-Jepp
Senior Director, Fiscal & Financial Services Policy
T: 613.238.4000 (2199) | jbrandon-jepp@chamber.ca
Pascal Chan
Vice President, Strategic Policy & Supply Chains
T: 613.238.4000 (2202) | pchan@chamber.ca
Madison Coulas
Coordinator, Government Relations
T: 613.462.8031 (2162) | mcoulas@chamber.ca
Bryan Detchou
Senior Director, Natural Resources, Environment & Sustainability
T: 613.238.4000 (2132) | bdetchou@chamber.ca
Alex Greco
Senior Director, Manufacturing & Value Chains
T: 613.238.4000 (2198) | agreco@chamber.ca
Gaphel Kongtsa
Director, International Policy
T: 613.238.4000 (2297) | gkongtsa@chamber.ca
Liam MacDonald
Director, Policy & Government Relations
T: 514.866.4334 (2267) | lmacdonald@chamber.ca
Diana Palmerin-Velasco
Senior Director, Future of Work
T: 343.961.1865 (2291) | dpalmerin-velasco@chamber.ca
Maggie Patterson
Senior Director, Global Programs & Partnerships
T: 613.238.4000 (2342) | mpatterson@chamber.ca
Olha Sotska
Policy Advisor
T: 613.238.4000 (2138) | osotska@chamber.ca
Randall Zalazar
Director, Government Relations
T: 613.238.4000 (2137) | rzalazar@chamber.ca
Business Data Lab
Stephen Tapp
Chief Economist and SVP, Research, Data and Analytics
T: 613.238.4000 (2299) | stapp@chamber.ca
Patrick Gill
Vice President, Operations & Partnerships, Business Data Lab
T: 613.238.4000 (2243) | pgill@chamber.ca
Andrew DiCapua
Principal Economist
T: 613.238.4000 (2157) | adicapua@chamber.ca
Marwa Abdou
Senior Research Director
T: 613.238.4000 (2259) | mabdou@chamber.ca
Kaviraj Singh
Senior Data Scientist
T: 613.238.4000 (2201) | ksingh@chamber.ca
Shamanth Chedde
Data Scientist
T: 613.238.4000 (2301) | schedde@chamber.ca
Chamber Network
Daniel Caramori
Vice President, Chamber Network Engagement
T: 514.866.4334 (4229) | dcaramori@chamber.ca
Member Relations
Xavier Roy
Senior Vice President, Membership Engagement and Advancement
T: 613.238.4000 (2288) | xroy@chamber.ca
Kimberly Gale
Vice President, Member Relations
T: 403.271.0595 | kgale@chamber.ca
Lianne Cheng
Director, Member Relations
T: 416.868.6415 (3239) | lcheng@chamber.ca
Anick de Sousa, CITP®, FIBP®
Senior Director, Member Relations
T: 613.238.4000 (2239) | adesousa@chamber.ca
Alexandra Miceli
Director, Member Relations
T: 416.868.6415 (3232) | amiceli@chamber.ca
Clare Urquhart
Coordinator, Member Engagement
T: 613.238.4000 (2354) | curquhart@chamber.ca
Export Services
Ottawa
Ariola Jakupi
Senior Director, Export Services
T: 613.238.4000 (2240) | ajakupi@chamber.ca
Alda Maksuti
Representative, Export Services
T: 613.238.4000 (2205) | amaksuti@chamber.ca
Kevin Tam
Representative, Export Services
T: 613.238.4000 (2232) | ktam@chamber.ca
Montreal
Daniella Labonne
Programs Manager, Export Services
T: 514.866.4334 (4227) | dlabonne@chamber.ca
Emma Souchu
Senior Advisor, Export Services
T: 514.866.4334 (4221) | esouchu@chamber.ca
Toronto
Claryce Yamane
Representative, Export Services
T: 416.868.6415 (3263) | cyamane@chamber.ca
Events
Stacey Roy
Senior Vice President, Events & Special Projects
T: 613.238.4000 (2237) | sroy@chamber.ca
Kristy Murray
Events & Experiences Director
T: 613.238.4000 (2283) | kmurray@chamber.ca
Khadijah White
Events & Experiences Manager
T: 416.868.6415 (3257) | kwhite@chamber.ca
Engagement and Communications
Amy Orfanakos
Vice President, Marketing & Strategic Communications
aorfanakos@chamber.ca
Shane Mackenzie
Vice President, Media and Stakeholder Communications
T: 613.238.4000 (2343) | smackenzie@chamber.ca
Michelle Croteau
Senior Designer, Digital & Print
T: 613.238.4000 (2247) | mcroteau@chamber.ca
Emily Gates
Marketing Communications Specialist
T: 343.961.2234 (2258) | egates@chamber.ca
Joy Knowles
Senior Writer
T: 613.238.4000 (2210) | jknowles@chamber.ca
Uchechukwu Mbagwu
Creative Manager
T: 613.238.4000 (2279) | umbagwu@chamber.ca
Rewa Mourad
Public Relations Specialist
T: 613.238.4000 (2211) | rmourad@chamber.ca
Tiwi Ojomo
Digital Marketing Associate
T: 613.238.4000 (2313) | tojomo@chamber.ca
Jacob Ritchie
Senior Designer, Digital & Print
T: 613.238.4000 (2228) | jritchie@chamber.ca
Goeun Choi
Junior Web & Graphic Designer
T: 613.238.4000 (2397) | gchoi@chamber.ca
Chris Roberts
IT Support and Systems Administrator
T: 613.238.4000 (2274) | croberts@chamber.ca
Human Resources
Sergio Knircha
Senior Director, Human Resources
T: 613.238.4000 (2280) | sknircha@chamber.ca
Amaka Amiesimaka
Human Resources Generalist
T: 613.238.4000 (2216) | aamiesimaka@chamber.ca
Finance & Operations
Manuela Lacroix, BBA
Chief Financial Officer
T: 613.238.4000 (2242) | mlacroix@chamber.ca
Evans Aihoon
Director, Finance
T: 613.238.4000 (2252) | eaihoon@chamber.ca
Marilyn Aitken
Accounts Payable Analyst
T: 613.238.4000 (2257) | maitken@chamber.ca
Jesse Banyai
Senior Finance Officer
T: 613.238.4000 (2218) | jbanyai@chamber.ca
Rachana Dave
Accounting Clerk
T: 613.238.4000 (2208) | rdave@chamber.ca
Linda Hopman
Coordinator, Administration & Operations
T: 613.238.4000 (2153) | lhopman@chamber.ca
Natalie Ouellette
Manager, Administration & Operations
T: 613.238.4000 (2221) | nouellette@chamber.ca
No comments:
Post a Comment