Moody's Analytics Chief Economist Mark Zandi warns that the global economy is "highly likely" to go into a recession if the U.S. and China don't reach a trade deal within three months.
"Business sentiment across the globe is extraordinarily fragile," the economist told CNBC.
He added that a survey conducted by Moody's recently showed that confidence among companies was at its weakest since the end of the financial crisis a decade ago.
"Businesses are really on edge and I think it's because of this trade war. And if it's not settled in the next couple (to) three months, I think a global recession is highly likely," said Zandi.
The economist also said the probability of a no-deal Brexit is "uncomfortably high" and that's a risk that could send Europe into a recession.
"The difference between an expanding economy and a recessionary one is simply faith — faith that the economy is going to be okay. And if you lose faith, no central banks are going to get that back. That's a recession," said Zandi.
Meanwhile, chances are increasing the United States and China will secure a deal to end a costly trade war, though discussions this week will be critical to resolving stubborn differences over how the deal will be enforced and whether and when the United States will lift hefty tariffs on Chinese goods, a top U.S. Chamber of Commerce official said on Tuesday.
The United States and China have been embroiled in a tit-for-tat tariff battle since mid-2018, costing the world’s two largest economies billions and roiling global markets. Negotiations between the two countries are due to kick off on Wednesday, with China’s lead negotiator in Washington just days after wrapping up talks last week in Beijing, Reuters reported.
The administration of U.S. President Donald Trump has imposed import tariffs on Chinese goods to put pressure on Beijing to meet a long list of demands that would rewrite the terms of trade between the two countries.
The demands include changes to China’s policies on intellectual property protection, technology transfers, industrial subsidies and other trade barriers.
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