A natural disaster in Japan and continued unrest in the Middle East are prompting concerns about the global economy, even though the risk of another recession remains low, CIBC World Markets said Thursday.
“After riding some strong tailwinds late last year, the global economy finds itself buffeted by new and, in some cases, completely unforeseen developments,” said Peter Buchanan, a senior economist at CIBC.
“While the risk of outright recession would still appear to be quite low, those developments have led to a scaling back of earlier optimism and an increase … in risk aversion.”
Buchanan said it would take some time to fully understand the human and economic implications of the earthquake in Japan, adding that rising oil prices on the back of Middle Eastern unrest is another factor.
“Surging gasoline prices raise questions about whether U.S. consumer spending can continue its healthier pace,” Buchanan said.
Market research firm TNS Canada said Thursday its monthly consumer confidence index was down in March.
Although the index found that Canadians remain confident about the current economic situation, the future is unclear.
“These global events have taken place just as we were coming out of the confidence doldrums,” said Norman Baillie-David, vice-president of TNS Canada.
“We’re seeing the impact of the Middle East and rising oil prices, and now the disaster in Japan, directly on Canadians’ outlook.”
TNS’ Expectations Index, which measures consumers’ economic outlook, lost nearly four points in March, dropping to 105.8.