World - Country Forecast Main.pdf (Size: 762.29 KB) (Files: 1)
World - Country Forecast Main.pdf
The outlook for the global economy has deteriorated considerably
following the recent escalation of the global financial crisis. Global growth at
purchasing power parity (PPP) rates of 2.6% in 2009 will be the slowest rate of
growth since 2002, and below the threshold for a global recession.
• The outlook for the US, the UK, the euro zone and Japan, where the
financial crisis is now highly synchronised, is particularly poor. We expect the
US to contract in 2009 and the euro zone, the UK and Japan to stagnate. The
US, the UK, Spain and others will also struggle with continued and deepening
problems in their property markets, further weighing on growth prospects.
• Emerging markets are also increasingly being caught up in the fall-out
from the industrialised world!s financial turbulence. The slump in world trade
growth expected in 2009 as a result of demand destruction in the industrialised
world will also hit export-oriented emerging markets hard. As a consequence, it
now seems likely that at least one emerging-market economy will fall into a
full-scale crisis, and the risk of contagion to other economies is substantial.
• Monetary policy interest rates in the US, the euro zone and the UK will be
cut sharply in coming months as policymakers attempt to stabilise the financial
markets. Massive fiscal measures to contain the dislocation in global financial
markets will also lead to negative implications for public finances in all