Global economic health has never been more robust, as the number of countries in recession has fallen to the lowest level in decades, according to a new report from Deutsche Bank.
An analysis of International Monetary Fund forecasts for individual countries' real gross domestic product year-over-year growth from 1980 out to 2021 reflects that the global economy has "never been in better shape," said Torsten Slok, Deutsche Bank's chief international economist.
"We have never seen a smaller number of countries in recession as we do at the moment; and if you look ahead to the next few years ... we are going to see that fall even lower," Slok said Thursday on CNBC's "Trading Nation. "
Ultimately, the IMF's global growth forecasts are in line with Slok's, with slim odds of a global recession ahead. The data he examined reflected that the Group of Seven countries (a grouping that includes the U.S., Japan and Germany) and G-20 countries, which includes China, the U.S. and France, are in overall healthy shape, Slok said.
Still, he doesn't believe this promising outlook justifies various equity market valuations around the world.
"In our forecast, we do expect growth to continue, and to look strong. So in that sense, that's not to say necessarily that stock market valuations are justified, but our measures are very clear that we cannot see a global recession on the horizon," Slok said.
At this point, the biggest risk to the global recovery in the wake of the financial crisis is inflation, which has been tepid in the U.S. and is expected to be quite low into next year, he told "Trading Nation."
"The biggest risk to all of this is that we do start to see inflation pick up, and therefore the Fed having to raise rates faster than what the market is expecting, " he said.
"If there is no recession on the horizon, and if there is no sign that the U.S., or Germany or Japan or China is about to slow down in a significant way, what could then stop the rally? What could then be the real trigger for turning things around? I think that the irony of all this is that the risks are not so much of a recession; the risk that we are facing in the markets today is there's a significant bigger risk of overheating," he said.