A recession is inevitable though the timing remains uncertain. The next recession is likely to be triggered by political acts or government interventions rather than by purely economic cycles. Current market exuberance appears to exceed underlying hard facts and financial fundamentals. Simultaneously, deep structural changes are unfolding globally across trade policies, supply chains, and technological innovation and disruption. Those structural shifts present significant challenges for businesses and finance leaders. CFOs and corporate decision-makers need to prepare for elevated political and regulatory risk alongside adapting to long-term structural transformation.
I think the risk that we currently have is the next recession will probably be triggered by a political act. We have an environment where regulatory activities, not just regulatory, but government interventions, are actually the rule rather than the exception. And I think some of those have the potential of triggering a recession. So I wouldn't want to forecast when that happens, but I would say it's definitely sure that it will.
The similarity could be called what people have called in the past irrational exuberance. I think we are again in a situation where market exuberance exceeds the hardcore realities that we actually are experiencing in terms of hard facts and numbers. What's different is we are right now undergoing very deep and very significant structural changes globally, in terms of trade policies, in terms of supply chains, but also in terms of technological innovation and disruption.
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