There is a near one in three chance the world economy will slip back in to recession this year as low oil prices and extraordinary monetary stimulus have a dwindling impact on global growth, Morgan Stanley has warned. The US investment bank said a “low growth environment” had made the world vulnerable to a litany of shocks, including fears that central banks have lost control over domestic financial conditions, while rising political risks from Europe to the Middle East threaten to overwhelm governments.

Global growth is forecast to hit just 3pc this year, down from Morgan Stanley’s earlier estimate of 3.3pc, with advanced world growth falling to 1.5pc. Japan received the biggest single downgrade of any country, with GDP slashed in half to just 0.6pc from 1.2pc. Global GDP fell to 2.3pc in the last quarter of 2015 – below the 2.5pc threshold which marks a recession – forcing Morgan Stanley to raise their global recession risk probability from 20pc to 30pc. READ MORE