UBS says that the globe is 'one step away' from recession as the world's two largest economies head to the G-20 summit.
that results in a new wave of tariffs would mean "major" changes to global GDP and market forecasts, global head of economic research Arend Kapteyn wrote in a note.
The impact of a scuttled trade deal at the U.S.-China meeting in Osaka and agitated relations wouldn't be felt immediately, however, but grow in severity over several quarters as higher prices stifle demand and growth, the UBS researcher wrote. In the United States, the cumulative reduction in GDP would be about 1% over six quarters, 1.2% in China and 0.74% in Europe, Kapteyn wrote.U.S.
But further aggravation of the trade conflict could push global equities down 20%, the economist wrote, with the prior U.S. outperformance relative to Europe eroding and emerging markets taking a heavy hit.
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