A study by the bank anticipates that there is a 40 per cent chance of stagnation occurring in the âdevelopedâ economies and markets.
Periods of stagnation are defined by the bank as times when the growth rate in per capita gross domestic product is 0.5 per cent and unemployment is viewed as âhigh and stickyâ.
Jose Ursua, a Goldman analyst, said in a report, which was quoted by Bloomberg, said that a period of stagnation âis a plausible risk and a legitimate concern for the major developed economiesâ.
âWhether these countries manage to avoid a âGreat Stagnationâ by a pick-up in the recovery is likely to depend on policy being able to restore confidence and putting in place reforms that can decisively jolt growth.â
The analysis was based on examining the last 150 years of macroeconomic data, which revealed that the probability of stagnation is much higher after a financial crisis.
By Jim Ottewill