Deutsche Bank's Jim Reid: I've been 'bear-frogged'

Deutsche Bank’s macroeconomic strategist Jim Reid has long been predicting a major downturn in global growth.

He’s pegged it to happen in either 2017 or 2018.

It’s a view that marked him out as an economic bear — someone who isn’t optimistic about future growth prospects.

But with investor concerns over China, underperforming European banks and cheap oil causing market ructions, Reid may well have been “outbeared” by recent events.

“I can’t help but feeling ‘bear-frogged’ at the moment,” Reid wrote in his daily analysis on Thursday. He says the risk is now that the global recession comes earlier rather than later as debt defaults begin to mount.

Here’s Reid (emphasis ours):

This time last year we discussed how the next major default cycle was likely in 2017-18 and in this year’s outlook we thought we were late cycle with 2017 the likely year of the next downturn. We haven’t changed our minds too much on all of this and still think we’ll scrape by this year without a global recession but that we’re not far away from one.

This risk is that we are too attached to our original timing and that everything we thought might occur in 2017 comes a year earlier.”

If global capital flows are anything to go by, then Reid might be right that a major downturn could be closer than originally thought.

This chart from UBS published on Wednesday shows how globalisation took a major hit in 2008 and hasn’t properly recovered, and may be about to turn down again:

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