Morgan Stanley sees global recession risk at 20%

The probability of a global economic recession this year is as high as 20% in a worst case scenario, investment bank Morgan Stanley said on Tuesday.

Reuters reports that its economists said soft consumer demand in the United States and Japan and weakness in emerging markets due to worries over plunging oil and commodity prices and capital outflows from China were among the main risks.

A global recession is loosely defined as growth below the roughly 2.5% needed for the world economy to keep up with an expanding population.

"Two and a half percent seems to be the danger area for global recession, because historically that is the real GDP growth rate where you see GDP per capita go negative," said Elga Bartsch, Morgan Stanley's global co-head of economics.

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Morgan Stanley sees 2016 global recession risk as high as 20 percent

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