Global economy enters recession


According Credit Suisse Group, the financial services company, headquartered in Zurich, Switzerland since 1856, the short-run outlook for the global economy is gloomy and the long-run outlook is darkened by heavy Government intervention in the banking system and by lower productivity growth due to falling investment rates. The medium-run outlook, however, is brightened by the vigorous fiscal and monetary stimulus measures being put in place by Governments all over the world.

Analysts predict the global economy is set to be in recession for the next nine to thirty six months. GDP growing rate is expected to be below 3%.

Report released by the UAE Ministry of Economy showed that the real Gross Domestic Product of UAE grew by 5.2 during 2007.

The global risk appetite is low, but has started to rebound from the extreme panic levels, representing major buying opportunities for both equities and credit. Typically, risk appetite lows occur just ahead of the trough in growth momentum measured by the change in global industrial production growth. Analysts expect a very deep trough around -10% p.a. in December, with a V-shaped rebound (in which the economy rises as abruptly as it fell) to very slightly positive growth in the early months of next year, as recent policy initiatives take effect and further stimulus measures are announced. This should be consistent with a bottoming process for risky assets in coming months, although the sustainability of recovery is still in question, given the extreme damage to confidence and the normal functioning of financial markets.


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