As equity markets suffered heavy losses last week, Morgan Stanley downgraded its forecasts for global growth this year and the next, citing weaker than expected growth in the second quarter of this year, along with slower global trade growth and additional austerity measures announced in several countries.
It cut s 2011 global gross domestic product growth forecast to 3.9% from 4.2%, and its 2012 estimate to 3.8% from 4.5%.
Morgan Stanley also lowered its 2011 GDP growth forecast for the euro zone to 1.7% from a previous estimate of 2%, and its 2012 estimate to 0.5%, from 1.2% previously.
For China, Morgan Stanley downgraded its 2012 GDP growth estimate to 8.7% from 9.0%.
The brokerage also pointed to elevated commodity prices, an over valued euro exchange rate and ongoing tensions in the periphery. It said “The US and euro area are hovering dangerously close to recession.”This comes at a time when global equity markets have been roiled by concerns about European sovereign debt contagion and global growth prospects, following a string of less than inspiring economic data out of the US, the euro zone and the UK.
( Source: www.steelguru.com )