Chris Watling from Longview Economics in London is currently visiting Australia conducting briefings with institutional investors. Watling has some rather sobering messages particularly when it comes to the short-term outlook for the domestic economy. After 25 years without a recession Watling says Australia has experienced an extended economic cycle fueled by a Chinese mining boom, a property boom and inflated domestic indebtedness. “There is a lot of excess in this economy. As I look around the world, every 7 or 8 years whoever has got the most excess has the biggest recession.” Watling highlights commodity related economies, such as Australia and Canada, as those most at risk of recession. “I think it is pretty clear – it has just got to happen. It’s just a question of when rather than whether or not it happens.” Watch the full interview:
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Another example of an economist pundit who doesn't know that he doesn't know!
There is no doubt Chris has some contrarian views. I'm happy to hear them and I also think he is trying to get people thinking about possibilities not probabilities. Economists have no chance of getting all their calls right - but I think there is merit in highlighting a range of potential scenarios.