FSL’s Chain Mail is a regular blog containing links to news articles that we think are worth sharing. In this edition, we explore the regional forecasts of a looming global recession.

Forecasts of a recession have gripped the globe. Although economies began to rebound from the disastrous impacts of COVID-19, new drivers of recession have emerged, including the war on Ukraine, the rising tensions between China and Taiwan, and the cost of living crisis. Yet, different regions are faring in various ways. Below, we take a look at the major markets and their outlooks on a possible recession.



In the UK, the Bank of England has predicted a recession lasting 15-months. Rising inflation (projected to reach 18% by the start of 2023), high interest rates and political turmoil caused by a new Prime Ministerial election have contributed to a gloomy forecast for the British economy. Other contributing factors, according to Portfolio Adviser, include “falling real incomes, very poor business and consumer sentiment, supply disruptions, [and] tighter and high energy prices.”

Commentators advise that investors and financial services professionals are braced for the worst, which may mean adjusting their portfolios and creating new strategies.



Brexit has not done enough to stave off the synchronicity between the UK and Europe. High inflation is seen across the continent, uncontrollable by the European Central Bank. Analysts forecast that there is “virtually no way to escape a Europe-wide recession.”

Europe has arguably been hardest hit by the war on Ukraine, with surging energy prices that have alerted leaders to the need to wean their countries off Russian gas and oil. Germany is extremely vulnerable, as one third of its gas and half of its coal comes from Russia. Since the war, it has seen high inflation similar to its neighbours and very low retail sales, forecasting a negative outlook for the economy.



While the US has entered a technical recession (with two quarters of GDP shrinkage), many commentators are taking a more holistic view. Employment is stable and unemployment is going down, leading some analysts to believe that the US may avoid a recession. The US National Bureau of Economic Research (NBER) takes a similarly rounded approach to defining recession as “a widespread contraction in the economy that lasts more than a few months.” Given the conflicting factors, it is yet to be confirmed that the US is in or headed towards a recession.

Nevertheless, wealth managers have taken a cautious view of the situation and now have “a lower appetite for risk,” confirming the fear that murmurs of a recession still have a powerful impact on professional habits.


Asia (China & Hong Kong)

Across the Pacific, Hong Kong has entered its second recession in 3 years. China, while faring slightly better, has seen GDP growth slow significantly, with only an expansion of 0.4% compared to last year. Commentators are not overly optimistic of China’s ability to avoid a recession, forecasting that it may still be a possibility.


Overall, the outlooks of a global recession are grim. Nevertheless, investors and wealth managers are finding ways to navigate the terrain by focusing on less risky investments, concentrating on cash and gold, and working on defensive strategies. While a recession may not be avoided, there are plentiful ways to mitigate risk and weather the storm.