The eurozone slipped into recession and Chinese data disappointed, warning signs for global markets that are relieved that the turmoil in the banking sector in March did not lead to a full-blown credit crunch and that a US debt ceiling crisis has been averted.

“We are heading for a downturn and it varies from region to region,” said Benjamin Jones, director of macro research at Invesco. “There is a lot of discussion and my level of confidence is quite low.”

The World Bank has just raised its outlook for 2023 as the US and other major economies have proved more resilient than forecast, although this year will still be one of the slowest growth years in the past five decades, according to the World Bank.

Goldman Sachs lowered the probability of a US recession in the coming year to 25% from the already below-consensus 35%, given the waning stress in the banking sector and the debt ceiling agreement that they say will lead to only minor cuts.

The International Monetary Fund no longer expects a recession in the UK this year. A Reuters poll expects a modest rebound in the eurozone.

But the outlook is souring. The World Bank expects growth to take a greater toll in 2024 than previously expected, as higher interest rates and tighter credit bite through.

There is increasing talk of stimulus measures in China to support the economy. Global economic data is delivering negative surprises at the fastest pace since September, a Citi index shows.

Christine Lagarde, head of the European Central Bank, says interest rate hikes are now having a powerful impact on bank lending.

Lending growth slowed further in April after banks reported in the first quarter that corporate loan demand reached its highest rate since 2008 and lending standards remained the strictest since the eurozone debt crisis in 2011.

US regional bank shares regained ground since the March rout and deposit outflows eased. But at the end of the first quarter, banks reported widespread tightening of lending standards even before the full impact of the banking crisis was felt. Deutsche Bank notes that historically, the Federal Reserve starts easing policy when the willingness to lend, as measured by an index in the closely watched Senior Loan Officer Opinion Survey, is close to zero.

That measure is now deep in negative territory, not a great sign.