Risk of recession has decreased, says economist

Despite varying analyst predictions, the likelihood of a recession has diminished, according to News Clearly's in-house economist Han de Jong. 'Mainly due to the reasonably constructive talks with the Chinese,' he notes. The US and UK have struck initial trade deals, stock markets show signs of recovery, the dollar is rebounding, and China has temporarily paused its trade war actions. After significant turbulence, some stability seems to have returned.

However, De Jong cautions that a recession remains a possibility. The severity and duration of any downturn would be critical. 'If major economic imbalances need addressing, a recession could be very painful,' he warns.

De Jong describes the current disruption in global trade patterns as a one-time shock. He emphasizes the strength of the US economy, with healthy financial positions for households, businesses, and banks, enabling quicker adaptation and recovery.

Leading institutions like the IMF have revised growth forecasts downward, but the impact is manageable. De Jong expresses cautious optimism, especially if the trade war is resolved. He also highlights positive factors like reduced inflation, improved purchasing power, and technological advancements benefiting the economy.

In Europe, the IMF adjusted growth forecasts less severely than for the US, as the trade war primarily affects US-European trade, a smaller portion of the overall economy.

Regarding Dutch businesses, De Jong doubts that Trump's 90-day trade war pause will last, given the potential harm to the US economy and upcoming elections. He hopes these temporary measures will end soon.