Gathering Gloom

Source: Economist

The Economist Intelligence Unit has made further downgrades to its forecast for global GDP growth. This primarily reflects significant downward revisions to our forecasts for Germany, Japan and China, all three of which have seen their exports hit hard by the collapse in global demand. At market exchange rates we now expect the global economy to contract by 0.9% in 2009, by far the worst performance since the end of the second world war.

Our new forecast is half a percentage point lower than our previous (already gloomy) forecast, published in December. Just a month ago, we expected world GDP to contract by 0.4% in real terms in 2009. But economic data continue to get worse, and we have adjusted our projections accordingly. About the only "good" news is that our US forecast is essentially unchanged, as the continued deterioration in economic data is offset by the prospect of scaled-up fiscal stimulus