US Recession Likely: UBS

Source : The Straits Times, August 19, 2008

ZURICH - THE United States is likely to slip into recession in the coming months as the cushioning impact of sharp interest rate cuts and tax rebates wears out, UBS bank economists said on Tuesday.

Real economic growth in the United States is expected to reach 1.3 per cent this year, but just 1.0 per cent next year. -- PHOTO: AP

'Sharp cuts in interest rates and tax rebates have prevented the US economy from sliding into recession until now,' said UBS in a statement.

'But the economists of UBS Wealth Management now expect the effects of fiscal concessions to peter out in the second half of the year, leaving the US economy facing the inevitable prospect of recession.'

Real economic growth in the United States is expected to reach 1.3 per cent this year, but just 1.0 per cent next year.

In the Eurozone, a sustained period of weakness is forecast, but the region is unlikely to sink into a severe recession, the bankers said.

The outlook for Asia's fast-growing economies is also uncertain, added the economists, noting that a 'steady deceleration in growth' is seen for the region. -- AFP