Study says UK, US most hit by recession

23rd October 2008, Comments 0 comments

A study by Swiss bank UBS says Britain and the US will be most affected by a global recession.

23 October 2008

ZURICH - Britain and the US will suffer most from a global recession predicted to last until the middle of next year, Swiss bank UBS said in a report Wednesday.

US gross domestic product is expected to shrink by 0.7 percent in 2009, with Britain's economy losing twice that share, or 1.4 percent, the study by UBS AG economists said.

The euro zone - covering the 15 nations that use the common currency - will contract by 0.3 percent.

Although growth in China and other emerging economies will continue to be high, the report predicts that global GDP will increase by only 2.4 percent in 2009, compared with 3.7 percent this year.

Growth of less than 3 percent for two or more consecutive quarters is considered a sign of economic recession.

"UBS expects US economic output to contract for at least four quarters from the middle of this year," the report said, adding that "the recovery beginning in the middle of next year is likely to be very weak."

The bank said US interest rates would likely be cut further as part of efforts by the Federal Reserve to kick-start the economy.

"UBS economists expect Europe's economy to enter into a recession almost in sync with the US," the report said. "In light of this, the central banks in Europe are also expected to further cut interest rates."

In Asia, large emerging countries such as China, India or Indonesia will be able to stave off the worst of the crisis thanks to domestic demand, it said.

[AP / Expatica]

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