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No, the sky isn’t falling for the global economy: Goldman

Carnage in financial and commodity markets may be painting a doomsday picture for the global economy, but the threat of a global recession is low, says Goldman Sachs, which advocates remaining overweight developed market equities over the next 6-12 months.

"Despite the recent escalation of market concerns, our economics team cautions against taking too big a global growth signal away from the weakness in China and its impact on commodity market weakness," Goldman Sachs' strategists led by Peter Oppenheimer wrote in a note late Monday.

"We remain of the view that a global recession is very unlikely," they said.

A sharp selloff has swept across equity and commodities market in recent days amid growing worries over a marked slowdown in the Chinese economy, the world's growth engine for long. U.S. stocks have crashed into bear market territory and oil prices have plummeted to multi-year lows.

Nevertheless, the bank highlights that growth in developed markets remains intact, and will remain relatively shielded to weakness in China and...