“While the risks have increased – and trade war is probably the biggest risk of them all and the one to keep an eye on – we have also seen some concerns about inverted yield curves (although they’re not a totally reliable indicator of recessions), but other indicators of a recession simply aren’t present,” Mr Oliver said.

“We haven’t had the excessive optimism you normally see prior to recessions during boom times – we simply haven’t had a boom.

“We’ve got very low inflation globally, central banks haven’t had to slam on the brakes, and we haven’t had a huge surge in debt around the world or high levels of cyclical spending on things like housing, investment or consumer durables.”

Mr Oliver said the outlook for the Australian sharemarket over the next year was closely tied to whether a recession would occur, as this could tip the ASX into a long-term bear market rather than the shorter term volatility being currently seen.

“If you look historically we often have share market falls but whether there is a recession is very important in determining whether those falls are a correction or mild bear market – where the market comes down say five, 10 or 20 per cent but is higher a year later – or whether it turns into a major bear market where share prices come down 20 per cent and a year later the index is down another 20 per cent,” he said.

“So whether we have a recession in the US, in particular, but also in Australia, is critically important in terms of the depth of any downturn in the sharemarket.”

Mr Oliver added that despite the downturn in the Aussie property market, other parts of the local economy were still performing solidly.

“Infrastructure spending is doing very well, there’s still solid demand for our exports and business investment, particularly mining investment, seems to be showing signs of turning the corner,” he said.

“So the bottom line is yes the risk is there but I think we will avoid a recession in Australia and globally, and therefore any pull back in sharemarkets is more likely to be a correction than a major bear market.”