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Recession stalks US, EU, but China offers hope: economists
London (AFP) Oct 15, 2008 The United States and Europe are heading for a "nasty recession" despite efforts to shore up the banking system, but Chinese growth could limit the damage to the world economy, economists said Wednesday. In a dark analysis of the financial crisis, British think tank Chatham House said leaders of developed countries must go beyond recent banking bail outs and come up with some "extraordinary 'out of the box' measures" to pull through. It predicted GDP in the United States and Europe would fall by at least one to two percent in 2009, warning this drop could reach 10 percent during the next few months. It said however that emerging markets, led by China, were likely to continue growing their economies and therefore limit the troubles spreading -- and "may even come to dominate the global business cycle." "Steady Chinese growth offers the best hope for limiting the damage to the world economy through the present crisis," said report author Vanessa Rossi. The unusual measures taken by US and European leaders to tackle the crisis, including bans on short selling and closing stock markets, may have to be extended as governments seek to stem panic, the economist said. "The message to the authorities has to be 'whatever it takes' -- which may have to be something truly remarkable," she said, adding that panic risked turning the recession into an economic slump. The financial crisis is having an impact everywhere, but Rossi said Asian exporters who have shifted their focus from the United States to China were less hit by the fall in US import growth. There were "worrying signs" that the Chinese property market was in trouble, while the slump in the stock markets was also causing rising tensions. Similar problems could be seen in the Gulf states and in Russia. But emerging economies were now "big enough, sufficiently interlinked and successful in promoting pro-growth policies to sustain their own growth in trade and GDP against a background of low growth in the US and other major" developed countries, Rossi added. Related Links The Economy
US offers banks capital infusion
Washington (AFP) Oct 14, 2008US authorities unveiled plans Tuesday to inject billions of dollars into banks to ease a global credit crisis, but the move appeared to provide little relief for ailing stock markets. |
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