UBS and Citigroup lowered their forecast for global growth, with sharp reductions to its euro zone view and more modest cuts for China, but ruled out the likelihood of a recession for now.
The cuts are the latest in a series of downgrades to global growth forecasts by major securities firms. Last week, Morgan Stanley cut its global growth view and said the United States and the euro zone are 'dangerously close to recession.'
UBS slashed its global gross domestic product growth forecast for 2012 to 3.3 per cent, while Citigroup cut its global GDP growth view for 2011 to 3.1 per cent from 3.4 per cent, and for 2012, to 3.2 per cent from 3.7 per cent.
Citigroup, however, said it does not currently expect recessions in the major economies as this slowdown in economic growth is not enough to reverse global profits.
For advanced economies, Citigroup cut its growth forecast to 1.4 per cent from 1.8 per cent for 2011, and to 1.7 per cent from 2.2 per cent for 2012.
'We do expect advanced economy growth will remain sluggish to end-2012 at least, with rising unemployment,' the brokerage said in a note to clients dated August 24.
UBS maintained its 2011 GDP growth view for the euro zone at 1.8 per cent, but lowered its forecast for 2012 by a full percentage point to 1 per cent.
The brokerage said its 2012 growth forecast cut for the euro zone was based on lower expected growth for the United States, Asia and Eastern Europe, as well as the impact of the latest market turmoil on sentiment and credit availability.
In a separate note, Credit Suisse said it saw a 50 per cent likelihood of avoiding a global recession as emerging markets account for 49 per cent of the global GDP, global monetary policy remains 'exceptionally loose' and corporate balance sheets are strong.
Source : New Age
