THE risk of recession is set to overtake inflation as the main concern facing world economies in the coming months, a top investment expert has said.
Christian Gattiker, chief investment strategist at Bank Julius Baer and Co, also warned that the UK had a “rather high” risk of stagflation – the term for soaring prices and a slump in growth happening at the same time.
Mr Gattiker, who is the Swiss bank’s global head of research and investment, was guest speaker for the Evolve leaders community at its co-working space in Poole’s Ashley Cross.
He is known for his TV appearances on CNBC and Bloomberg, as well commentary in the Financial Times and Wall Street Journal.
“Inflation is the topic of the past six months. The next six months will be about the risk of recession,” he said.
He added: “There’s a lot of talk about stagflation and I think the UK has a rather high chance of stagflation happening.”
He said the UK was “what we call a deficit country”, meaning it consistently imported more than it exported.
He said Britain was being affected by a lack of clarity about Brexit, with the likelihood of further tension with the European Union over Northern Ireland’s trade situation.
“If the rules seem to change every month or every year it’s hard for corporations to make a strategic decision,” he said.
His comments came before the resignation of Rishi Sunak as chancellor.
Mr Gattiker also said the corporate world had been poor at predicting economic events but better at responding to them.
“At the outset of the pandemic in March 2020, the car industry globally was preparing for a breakdown in demand similar to 2008. Then they cut their production rate massively,” he said.
This had caused producers of semi-conductors to drastically scale back their own production, leading to many of today’s supply chain problems.
“Everybody cut back on production just to realise six months later that there was a regular demand for cars, this was not a repeat of 2008,” he said.
“The corporate sector did a very good job of dealing with the fact. We’re bad at seeing where the future is heading but we’re pretty good at managing crises when they arrive," he added.
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