Carnage in financial and commodity markets may be painting a doomsday picture for the world economy, but the threat of a global recession is low, says Goldman Sachs, which advocates remaining overweight developed market equities over the next six to 12 months.
“Despite the recent escalation of market concerns, our economics team cautions against taking too big a global growth signal away from the weakness in China and its impact on commodity market weakness,” Goldman Sachs’ strategists led by Peter Oppenheimer wrote in a note late Monday.
“We remain of the view that a global recession is very unlikely,” the strategists said.
A sharp selloff has swept across equity and commodities market in recent days amid growing worries over a marked slowdown in the Chinese economy, the world’s growth engine for long. U.S. stocks have crashed into bear market territory and oil prices have plummeted to multi-year lows.
Nevertheless, the bank highlights that growth in developed markets remains intact, and will remain relatively shielded to weakness in China and emerging markets.
