Busted: Bankers and The Global Economy

April 9, 2008

Fed: Global Economic Outlook

Filed under: banking, central bank, federal reserve, investment, money — Tags: , , , , , , , , , , — digitaleconomy @ 2:32 am

In the major advanced foreign economies, the growth rate of gross domestic product declined in the fourth quarter. The source of the slowdown has varied substantially across economies. In the Euro area and in the United Kingdom, output was restrained by a softening in domestic demand. In contrast, Canadian domestic demand continued to increase at a very strong pace, but because of an offsetting steep decline in net exports, real GDP rose only modestly. Japan was the exception among the advanced foreign economies to the pattern of slower growth; real GDP there strengthened in the fourth quarter with higher domestic spending and continued strength in exports.

Early first-quarter economic indicators for advanced foreign economies pointed to slowing growth. Growth slowed a bit in emerging markets, though it continued to advance at a fairly strong rate. In emerging Asia, the pace of real GDP growth picked up in the fourth quarter in China and South Korea, but it softened in most other countries. The rate of increase in economic activity slowed in Brazil, Mexico, and several other countries in Latin America in the fourth quarter, but remained generally strong.

The outlook for the United States is seen as negative and fragile. The Fed reported problems of declining asset values, credit losses, and strained financial market conditions could be quite persistent, restraining credit availability and economic activity, delaying and dampening economic recovery.

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