Global growth to slow down to 3.7% in 2008; US to see recession
Global economic growth is expected to fall further to 2.4% in '09. Stocks 52 Wk: High, Low | Gainers | Losers | Mkt Cap Gainers | Mkt Cap Losers | Only: Buyers, Sellers
By PTI |
LONDON: Global economic growth is projected to decline to 3.7 per cent this year, much below nearly 5 per cent recorded in 2007, as the world's largest economy US is expected to slip into a recession.
Further, Europe is expected to see economic downturn in the coming quarters and Asian economies may also feel the pinch, Swiss banking major UBS said.
Moreover, the global economic growth is expected to fall further and touch 2.4 per cent in 2009.
"The downward revision in the economic forecast has been caused due to the distinct escalation of the global financial and credit market crisis since September," UBS said in a statement.
The US economic output is expected to contract for at least four quarters from the middle of this year.
" Recession can no longer be avoided after the sustained losses on the equity and real estate markets and the credit crunch that is becoming increasingly entrenched," UBS said in a statement.
In Asia, according to UBS, exports in smaller and open economies have decreased noticeably, however, larger economies like India are likely to maintain a better stance.
"The Japanese economy is expected to stagnate at best in the coming year. Large countries such as China, India or Indonesia should fare better, as they have a smaller export ratio than the smaller Asian economies," UBS economists stated.
China, which accounts for about 40 per cent of Asia's economic output (excluding Japan), particularly has room to manoeuvre in both its fiscal and monetary policy, making it possible to counter a decline in economic growth of well below eight per cent.
UBS added that the weak global economic momentum and the smoldering financial market crisis have also greatly restrained European economies.
"The downturn in growth is likely to be particularly dramatic in those countries in which, similar to the US, the previously heavily overvalued real estate markets are now collapsing (Great Britain, Spain) or which are battling structural problems (Italy)," the statement said.
It said recovery in the economic growth in the US is likely to be weak and may begin in the middle of the next year and the economy would probably grow significantly slower in the foreseeable future than the 3 per cent trend growth generally assumed hitherto.
UBS economists also anticipate further interest rate cuts by the US Fed as well as additional fiscal stimulus programmes in response.
Further, Europe is expected to see economic downturn in the coming quarters and Asian economies may also feel the pinch, Swiss banking major UBS said.
Moreover, the global economic growth is expected to fall further and touch 2.4 per cent in 2009.
"The downward revision in the economic forecast has been caused due to the distinct escalation of the global financial and credit market crisis since September," UBS said in a statement.
The US economic output is expected to contract for at least four quarters from the middle of this year.
" Recession can no longer be avoided after the sustained losses on the equity and real estate markets and the credit crunch that is becoming increasingly entrenched," UBS said in a statement.
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In Asia, according to UBS, exports in smaller and open economies have decreased noticeably, however, larger economies like India are likely to maintain a better stance.
"The Japanese economy is expected to stagnate at best in the coming year. Large countries such as China, India or Indonesia should fare better, as they have a smaller export ratio than the smaller Asian economies," UBS economists stated.
China, which accounts for about 40 per cent of Asia's economic output (excluding Japan), particularly has room to manoeuvre in both its fiscal and monetary policy, making it possible to counter a decline in economic growth of well below eight per cent.
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UBS added that the weak global economic momentum and the smoldering financial market crisis have also greatly restrained European economies.
"The downturn in growth is likely to be particularly dramatic in those countries in which, similar to the US, the previously heavily overvalued real estate markets are now collapsing (Great Britain, Spain) or which are battling structural problems (Italy)," the statement said.
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It said recovery in the economic growth in the US is likely to be weak and may begin in the middle of the next year and the economy would probably grow significantly slower in the foreseeable future than the 3 per cent trend growth generally assumed hitherto.
UBS economists also anticipate further interest rate cuts by the US Fed as well as additional fiscal stimulus programmes in response.
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