September 08, 2008

UBS cuts 2008 global growth forecast on US slowdown

UBS AG cut its forecast for global economic growth, predicting that the US will slide into recession in the first half of 2008.

Mr Larry Hatheway chief economist of UBS in a recent report said that “Global gross domestic product will expand 3.6%in 2008 down from an earlier forecast of 4.3% and the world economy will grow 3.8% in 2009, compared with a previous prediction of 4.1%.”

He said "We now expect below trend growth in the world economy for the first time since 2002, a significant departure from the robust expansion of the past four to five years. China and India are expected to be relatively well insulated from the global downturn but will not be immune."

UBS said that “The slowdown will hurt Asia's export dependent economies, UBS said, lowering its forecasts for Hong Kong, Singapore and South Korea. We believe harder hit will be Asia's smaller, more open economies, including Korea, Taiwan and most of Southeast Asia. The economies of central and eastern Europe and Latin America are also likely to grow more slowly."

Goldman Sachs Group Inc, Morgan Stanley and Merrill Lynch & Co also forecast that the US will slip into recession this year for the first time since 2001 amid fallout from the subprime mortgage crisis.