The West's Central Banks Will All Cut Interest Rates; GROWTH
Fitch Ratings yesterday said housing and consumer-led downturns in advanced economies will drive world growth to its lowest level in five years in 2008 - despite robust growth in Brazil, Russia, India and China (BRIC) and other emerging markets.
Measured at market exchange rates, growth will be 2.6 per cent, the rating agency said.
Fitch predicted GDP growth at one per cent in the United States; 1.3 per cent in Japan; 1.4 per cent in the United Kingdom and 1.7 per cent in the Eurozone. With the US slipping into recession, Fitch projected 1.3 per cent growth in the major advanced economies (MAEs), comprising the United States, Eurozone, Japan and the United Kingdom, no higher than in 2001.
Deteriorating prospects for the US consumer and a deeper and a more prolonged than expected slump in the US housing market lie at the heart of the weaker outlook, Fitch said.
Given the importance of US consumers as a source of final demand for the rest of the world, this will have sizeable knock-on effects elsewhere through trade linkages, including in emerging markets, Fitch said.
The evidence is still tentative on the macroeconomic fall-out from the credit crunch - credit growth has remained quite robust in the MAEs - but the deterioration in consumer confidence has become clearer, it said. …