There are currently four scenarios for the global economic outlook. Three of these entail potentially serious risks with far-reaching implications for markets.

The most positive is a “soft landing” whereby central banks in the advanced economies manage to bring inflation back down to their 2% targets without triggering a recession.

There is also the possibility of a “softish” landing. Here the inflation target is achieved, but through a relatively mild (short and shallow) recession.

The third scenario is a hard landing, where returning to 2% inflation requires a protracted recession...