06 June 2008 03:42 [Source: ICIS news]
PALM DESERT, California (ICIS news)--The US economy is unlikely to head into a deep downturn but the recovery will be weak and prolonged, said the chief economist of consultancy Global Insight on Thursday.?xml:namespace>
“We don’t see a deep downturn in the ?xml:namespace>
Behravesh compared the current situation to the
“Whether or not we are in a recession defined by the traditional metrics is irrelevant,” he said adding, “Housing and financial markets are in a recession, but export industries like the chemical industry are doing well. So is technology, oil and gas.”
The US economy will likely be “dead in the water” through the first half of 2008, bump up in the third quarter on the government tax rebates, but then could head into negative territory in the fourth quarter as those rebates “steal” growth from the fourth quarter, said Behravesh.
He sees the
Growing inflation and the housing crisis will continue to weigh on the
Stagflation is the combination of inflation and stagnant or declining economic growth, a common feature of
“However, this time it will be stagflation-lite,” said Behravesh.
And emerging market economies are likely to continue growing at rapid rates of 6-8%, indeed “decoupling” from the
“There continues to be a lot of money spent on infrastructure and talent within the domestic emerging economies,” said Behravesh. “As to how long this growth will last, our best guess is until 2010.”
While the fast-growing emerging economies will likely decouple from the
“Germany does not export much to the US, but exports a lot of things like infrastructure to China, which uses them to produce goods for the US market,” he noted, adding “So if the US economy slows, that will impact Germany’s exports to China.”
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