NEW YORK, Jan. 13, 2009 (GLOBE NEWSWIRE) -- Both developed and emerging market economies will fall into a global recession in 2009, as commodity prices continue their decline and the U.S. dollar recovers ground against the euro, said leading finance experts at the seventh annual Dow Jones Indexes/ STOXX Ltd. Global Economic Outlook.
Recession in the U.S. to Continue Through 2010
"Consumer spending has contracted for the first time in two decades; unemployment rates will reach eight percent by mid-2009; and we still have not seen the bottoming out of the housing market. The U.S. economy is in the middle of the longest and most severe recession in the last fifty years. We expect U.S. GDP will continue to contract throughout 2009 for a cumulative output loss of five percent and a recession that will last around two years," said Christian Menegatti, managing editor and lead analyst, RGEMonitor.com.
Euro to Outperform While U.S. Dollar to Strengthen Against Major Currencies
"The outlook for the U.S. dollar in 2009 is favorable. While the euro is expected to outperform the greenback, and virtually all other currencies, early in the year on interest rate differentials, the dollar will remain strong and stable against other major and peripheral currencies," said Michael Woolfolk, senior currency strategist, Bank of New York Mellon. "On the tenth anniversary of the euro's launch, the European currency is expected to reach parity against the British sterling -- an important psychological benchmark in terms of its international status. By mid-year, the European Central Bank is expected to follow all other major central banks by adopting a zero interest rate policy, which will allow the U.S. dollar to recover ground against the euro. Against other currencies, the greenback should perform well throughout the year. Emerging market currencies will fare the worst during 2009 as falling commodity prices, an exodus of foreign investment and high levels of risk aversion conspire to push them lower against the greenback."
Commodity Markets to see Temporary Correction
"Leading world economies that are likely to find themselves in a recession include the U.S., the U.K., Japan and Europe, as well as several emerging market countries. The U.S. has been implementing solutions, but other nations have fallen behind the curve. However, the death of the automotive industry in the U.S. should be realized by this year, compelling Americans to accept that the U.S. is no longer a manufacturing nation," said Richard Yamarone, director of economic research, Argus Research Corporation. "In the commodity markets, declining prices are being driven by the reversal of the unsustainable commodity bubble of last summer. This is not a systemic decline but rather a temporary correction. One country that will benefit is Saudi Arabia, as the state can afford lower oil prices while its competitors -- Venezuela, Iran, Russia, can not."
Year-to-Date Performance of Major Market Indexes (as of 1/12/09)
Dow Jones Industrial Average: -3.45% Dow Jones Wilshire 5000(sm): -3.53% Dow Jones STOXX 50 Index: 2.17% Dow Jones STOXX 600 Index: 3.11% Dow Jones Wilshire Asia-Pacific Index: -0.94% Dow Jones Asian Titans 50 Index: 1.07% Dow Jones BRIC 50 Index: -2.47% Dow Jones Global Titans 50 Index: -3.28% Dow Jones Wilshire Global Total Market Index(sm): -1.98% Global Dow: -1.72% Dow Jones-AIG Commodity Index: -3.34%
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Disclaimer: Statements made by the speakers at this event, and summarized in this document, do not in any way reflect the opinion of Dow Jones Indexes, STOXX Ltd., Dow Jones & Co. or News Corporation.
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