With Trump's trade war against China the biggest hindrance to growth, the chance of a global recession in the next two years will become inevitable if there is no U.S.-China trade deal in the next three months.
This dire warning was sounded by Mark Zandi, Moody's Analytics Chief Economist, who said it is "highly likely" the world will enter into an economic recession if the U.S. and China don't reach a trade deal before July.
"Business sentiment across the globe is extraordinarily fragile," said Zandi on CNBC.
He revealed a survey conducted by Moody's recently shows that confidence among companies was at its weakest since the end of the financial crisis a decade ago.
"Businesses are really on edge and I think it's because of this trade war. And if it's not settled in the next couple (to) three months, I think a global recession is highly likely."
Increasing the odds of a recession is a "No-Deal Brexit," which now is at an "uncomfortably high" level. Zandi warned a No-Deal Brexit might plunge Europe into a recession
Zandi said that if talks between the U.S. and China fail, which still seems likely, and end without a trade deal, this will hurt business sentiment further. One result will be companies reducing hiring, he said. When that happens, unemployment will rise, causing consumers to lose faith in the economy. A recession can't be far off in this grim scenario.
"The difference between an expanding economy and a recessionary one is simply faith -- faith that the economy is going to be okay. And if you lose faith, no central banks are going to get that back. That's a recession," said Zandi.
Zandi was also gravely concerned about the effect a No-Deal Brexit will have on Europe as a whole.
As expected, the British Parliament on Monday again failed to break an immovable deadlock about the country's exiting the European Union. Fractious British lawmakers have thrice rejected Prime Minister Theresa May's divorce deal but are unable to agree on an alternative.
Zandi said his "very subjective" guess is there's a one-third probability Brexit will happen without a deal, which "feels uncomfortably high" in his opinion.
"If we have a no-deal Brexit ... certainly, the U.K. economy and the EU economy will be in recession, and I think the rest of the global economy will be not too far behind. So I think that'll be a real problem as well," said Zandi.
