International news in brief: 10% chance of global recession - Crimea crisis spurs warnings

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A top economist says we face a 10% chance of a global recession triggered by escalating tension between Russia, the US, and Europe over Ukraine.

Allen Sinai, CEO of New York-based consultant Decision Economics Inc, told Bloomberg that although economic growth is set to speed up this year, the mounting geopolitical strains spurred by problems in the Ukraine and other parts of the globe can’t be overlooked.

And businesses are also becoming concerned. A poll of 1,400 corporate executives by consultants McKinsey & Co this month revealed 70% of participants cited geopolitical tensions as a risk to global growth in the next year. This figure has soared from 27% in December.

China’s biggest banks have more than doubled the level of bad loans they wrote off last year, indicating strained financial times as growth in the world’s second biggest market slows.

The five biggest banks in China, which account for more than half of the country’s loans, removed US$9.5 billion of loans from their books, reported The Financial Times.

These 2013 results have soared 127% from the previous year.

Pope Francis has just named top economists and finance experts appointed to a newly created Vatican Council for the Economy.

The creation of the 15-member council, which includes top laymen from the world of finance and economics, reflects the widely acknowledged desire of Pope Francis to make changes to an institution previously viewed as secretive and murky, the Sydney Morning Herald reported.

The council consists of seven non-religious figures, including Maltese economist Joseph Zahra, former director of the Central Bank of Malta, and France's Jean-Baptiste de Franssu, chairman of mergers and acquisitions advisory firm INCIPIT and former head of the European Fund and Asset Management Association.

The council also includes eight prelates from around the world and will be co-ordinated by Munich and Freising Cardinal Reinhard Marx, who is known for speaking on socio-economic issues in Germany.

Euro-area inflation has just hit a four-year low for the month of March, raising concerns over the impact that a prolonged period of low inflation could have on the credit risk profiles of asset classes.

Bloomberg reported that consumer prices rose by just 0.5% over the past year, well below the 2% target. Chris Scicluna, the head of economic research at Daiwa Capital Markets in London said the low inflation spells trouble for the banks.

"0.5% is not where any central bank in its right mind would want to be," he said. In some cases low inflation can actually tip into outright deflation.

But it seems some of the big banks, including the Federal Reserve and the European Central Bank, are still reluctant to take more extreme measures to stimulate growth and raise inflation fearing they could create asset bubbles and possibly cause inflation to become too high.


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