MercoPress. South Atlantic News Agency

The Economist sceptical about the crisis having bottomed out

The end of the economic crisis and the return to the growth path are still distant according to the Economist Intelligence Unit, EIU, which predicts the global economy will contract 1.8% in 2009.

The EIU report is rather “sceptical” about those voices which have been announcing lately that the crisis has reached “the bottom or the inflection point” and that the global economy recovery is ready to take off. EIU argues that an upturn of economic conditions are “long term” because of the massive losses banks, financial institutions and corporations still have to assimilate.

In effect the latest EIU downgrades its growth forecast for the global economy for 2009, estimating a contraction of 1.8% compared to the previous estimate of 1.5%. The Euro zone is particularly hit by the estimates, down to minus 4.3% from the previous minus 3.4%. This apparently is the result of the negative evolution of the group’s main economy, Germany which is forecasted to contract 5.3% in 2009 because of a fall in exports.

Something similar is expected to happen with the Japanese economy severely hit by the collapse in exports, which is seen as contracting 6.4% this year.

The EIU also estimates that world trade will experience a drop of 9.7% in 2009.