The following are economic outlooks from selected major banks -- some formerly known as investment banks -- for 2009. The factbox will be updated to include additional views, when they become available. New entries marked *:
* CREDIT SUISSE:
"We believe that global GDP will be 1.2 percent next year and G7 growth its weakest since 1945 (with the most synchronised downturn on record). We do not see global growth returning to trend until 2011. The main problems are: (a) it will take 3 years for the U.S. to de-leverage (the U.S. has $2.5 trillion of excess consumer leverage, which requires the savings ratio to rise to 8 percent+); (b) apart from the U.S. and Germany, housing is still overvalued; (c) there is 1.7 million excess inventory of homes in the U.S., probably requiring another 5-10 percent fall in U.S. house prices; (d) bank lending conditions are extraordinarily tight and we doubt they will ease until another $200 billion to $600 billion of capital has been raised; (e) European monetary and fiscal policy remains reactive....
"The good news is that deflation scares look overdone (with bonds discounting a 1 percent p.a. fall in prices up to 2013). This is not Japan or the 1930s. Deflation is falling wages, not falling prices. We now have the right macro economic theory (print & spend; Friedman/Keynes), the right policy tools (big government) and the right person (Bernanke)."
DEUTSCHE BANK: see http://gm.db.com
"We now expect global growth to be barely above zero in 2009 ... with downturns in all major regions setting records not seen in the past 50 years.
"This deep recession marks the end of a long-term expansion that was characterised by a few key industrial countries assuming the role of the global net consumer, and all other countries the role of the net producer.
"Consumer demand in major industrial countries should be depressed for some time to come.... Massive fiscal stimulus, especially in the U.S. should fill a good deal of this gap in aggregate demand: enough to avert serious risk of deflation, but not enough to ensure a self-sustaining expansion of global growth for some time to come...
"In our view, a new engine of private demand growth will be needed, and we see a likely candidate in the still largely untapped consumption potential of the rapidly expanding middle classes in the large emerging market countries."
BNP PARIBAS: see www.globalmarkets.bnpparibas.com
"The intensification of the financial crisis has pushed economic growth off the cliff. We are now forecasting U.S growth of -1.6 percent next year, euro zone at about -1 percent and Japanese at -0.9 percent. Global growth is projected at a bit above 1 percent -- qualifying as a global recession.
"Inflationary forces are fading. Deflation will be the worry in the future, especially in the U.S. We expect the Fed funds rate to be cut to 0.5 percent in December. The (Bank of Japan) will stay pat at 0.3 percent but we expect the (Bank of England) to cut to 1 percent by February with the (European Central Bank) reaching the same mark mid-year.
"There will be a deluge of bad news in coming months."
MERRILL LYNCH
"The global economy is in recession with growth at 1.3 percent in 2009, the weakest since 1982. The downgrade in growth estimates has been uniform. Our first cut at 2010 envisions a rebound to 3.1 percent. At its core, the global financial crisis brings an end to the vendor financing model, whereby excess consumption in the U.S. was financed by a savings glut in the emerging world. The market will ensure this adjustment finally happens.
"Stimulus and history suggest that H1 2009 will likely feature a rebound in global growth before that recovery, in itself, peters out. A surge in government spending supports the global economy, but complicates investment decisions and makes the government riskier. Expect lower productivity growth and competition for capital as crowding out makes a comeback. Rapid central bank reserve accumulation has come to an end, in our view, bringing about an unwind to the 'conundrum'. Commodity prices should remain weak and the dollar strong until mid-year, before reversing." (Compiled by Jeremy Gaunt; editing by Simon Jessop)