Washington, D.C., United States (AHN) – Economists said that the chances of the U.S. entering into recession had grown higher. In a survey, the economists said the chances of a recession increased to 30 percent, which is twice as high compared to their forecast three months ago.
Even if the U.S. would avoid a recession, the economists said economic growth rate is expected to crawl at 2.5 percent, down from their April prediction of 3.1 percent. To reduce unemployment, the U.S. needs to register a minimum of 3 percent growth rate.
With these figures, they said that the joblessness rate would likely go down to a mere 8.8 percent next year from the current 9.1 percent. Their estimate is less rosy compared to their April forecast that unemployment would go down to 8.2 percent by middle of next year.
A quarter ago, prior to the U.S. credit ratings downgrade by Standard & Poor’s, economists forecast a strong recovery for the country for the last six months of 2011. They based their positive outlook on declining gasoline prices.
Outside the U.S., Morgan Stanley predicted a relatively low risk of a global recession. Jonathan Garner, chief Asian and emerging market strategist of Morgan Stanley, explained the low risk assessment to resilient commodities, central bank policies in developed nations and slowing inflation in emerging economies.
Because of the emerging markets offering better opportunities than those in developed economies, Morgan Stanley advised investors to shift their funds into developing market stocks.
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