The intensification of the financial crisis, the significant increase in uncertainty and the general loss of confidence are creating an environment that favours an even sharper deterioration in economic activity in the USA, Europe and Japan.
The intensification of the financial crisis, the significant increase in uncertainty and the general loss of confidence are creating an environment that favours an even sharper deterioration in economic activity in the USA, Europe and Japan. Tighter credit supply arising from weaker bank balance sheets is affecting most of the major developed countries and is weighing on consumption and investment.
In the USA, GDP growth is holding up relatively well at the moment, climbing 0.8% year-on-year in September after 2.1% in June. But several indicators show clearly that the US economy has entered recession or at least a period of very much slower activity.
In the euro area, GDP contracted during the second and third quarters, for the first time since the single currency was launched in 1999.
The situation is no more encouraging in the UK. The country has borne the full brunt of the financial crisis, reflecting the predominance of financial services in its economic activity.
In Japan, GDP contracted dramatically in the second quarter, reflecting lower exports, linked to weaker international demand, and falling consumption
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