Recession still unlikely despite headwinds

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“Although we continue to think that the most likely outcome is for the global economy to continue expanding, we now expect slower growth and higher inflation, and we presume that the odds of recession have increased,” the report said.

RBC’s base-case scenario is for the global economy to expand as inflation peaks by the end of the year. The firm forecast 3.6% global growth this year, down from 6.2% in 2021, but noted that the conflict and the effect of sanctions create considerable uncertainty. As a result, the firm put the risk of U.S. recession this year at somewhere between 25% and 50%.

The correction earlier this year in major U.S. equities markets created room for stronger returns, even with the war creating uncertainty, the report said. “[G]iven that measures of investor sentiment are extremely pessimistic and valuations have come down, any indication that the outlook is improving could result in a significant positive…

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