Morgan Stanley raises chances of a global recession up to 40%

Moneycontrol BureauMorgan Stanley has raised its probability of a global recession in the next 12 months to 40 percent, up from 30 percent before. The brokerage house sees the negative impact of political uncertainty on risk assets and demand growth beginning to play out. The ripple effects of the UK’s shock vote to leave the EU will not dissipate quickly, the report adds.

The ‘discontent’ from the Brexit will spread to the impending US elections to be held in early November. Other countries where elections are due will get also feel the effects.

“Next year, general elections in the Netherlands (no later than mid-March), a presidential election in France (late April and early May) and national elections in Germany (late September) could bring more of the same,”it said.

Political discontent will also hamper structural reforms, it said.

"Instead, voter’s discontent will likely swing the political pendulum towards protectionism."