The world’s major advanced economies are likely to experience next year the steepest decline in GDP since World War II, Fitch Ratings said in its latest Global Economic Outlook report yesterday.
The US, the UK, the EU and Japan are expected to see a contraction of 0.8 percent in aggregate GDP growth next year, down from an estimated 1.1 percent this year, the agency said in the report.
The fast deteriorating credit crisis in the advanced economies has resulted in tighter credit conditions worldwide, which have led consumers to reduce spending and forced companies to slow expansion.
“The combination of recession in developed countries, lower commodity prices and reduced international capital flows will result in a sharp slowdown in growth in emerging markets, though most will avoid outright recession,” Fitch said.
On average, global GDP will increase only 1 percent next year, marking the slowest rate of growth since the early 1990s, the report said. The world economy grew an average 3.5 percent over the last five years, it said.
Fitch expects China’s GDP growth to slow to just over 7 percent next year, which will be the slowest growth pace in nearly two decades.
On Monday, Credit Suisse said in a research note that it cut its GDP growth forecast for China to 7.2 percent next year from its previous estimate of 8.8 percent.
Fitch forecast collective growth in GDP of 5.7 percent next year for Brazil, Russia, India and China.
UBS AG has also adjusted downward its global growth forecast to 1.3 percent for next year, from its previous estimate of 2.3 percent, UBS economist Sean Yokota said in a report released on Tuesday.
Yokota said growth of 1.3 percent is well below the IMF’s definition of global recession, which is anything under 2.5 percent.
The recession will hurt Taiwan, prompting UBS to cut Taiwan’s GDP growth to 1.7 percent next year from 3.1 percent.
“Taiwan is a relatively small and open economy and exports are 70 percent of GDP,” UBS said. “When global demand falls it is not just exports that slow but domestic demand as well.”
Furthermore, UBS said it saw further growth headwinds from the rapid fall in asset prices globally, which will have a significant negative wealth effect and reduce demand globally and in Taiwan. The bank expects Taiwan to report 2.9 percent in GDP growth in 2010, the report said.
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
Demand for artificial intelligence (AI) chips should spur growth for the semiconductor industry over the next few years, the CEO of a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said, dismissing concerns that investors had misjudged the pace and extent of spending on AI. While the global chip market has grown about 8 percent annually over the past 20 years, AI semiconductors should grow at a much higher rate going forward, Scientech Corp (辛耘) chief executive officer Hsu Ming-chi (許明琪) told Bloomberg Television. “This booming of the AI industry has just begun,” Hsu said. “For the most prominent
Former Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Mark Liu (劉德音) yesterday warned against the tendency to label stakeholders as either “pro-China” or “pro-US,” calling such rigid thinking a “trap” that could impede policy discussions. Liu, an adviser to the Cabinet’s Economic Development Committee, made the comments in his keynote speech at the committee’s first advisers’ meeting. Speaking in front of Premier Cho Jung-tai (卓榮泰), National Development Council (NDC) Minister Paul Liu (劉鏡清) and other officials, Liu urged the public to be wary of falling into the “trap” of categorizing people involved in discussions into either the “pro-China” or “pro-US” camp. Liu,
Minister of Economic Affairs J.W. Kuo (郭智輝) yesterday said Taiwan’s government plans to set up a business service company in Kyushu, Japan, to help Taiwanese companies operating there. “The company will follow the one-stop service model similar to the science parks we have in Taiwan,” Kuo said. “As each prefecture is providing different conditions, we will establish a new company providing services and helping Taiwanese companies swiftly settle in Japan.” Kuo did not specify the exact location of the planned company but said it would not be in Kumamoto, the Kyushu prefecture in which Taiwan Semiconductor Manufacturing Company (TSMC, 台積電) has a
RSS