Developed economies in recession

Almost all developed countries, including the US, Japan, Germany and the UK, are officially in recession, with their economies under a phase of contraction.

The US economy, which grew 1.4 per cent last year, is expected to contract 0.2 per cent this year as the economy entered a recessionary phase, according to a survey undertaken by the National Association for Business Economics.

The recession in the US economy is expected to last till the end of 2009, amidst falling stock values and property prices, a freeze in construction activities and a fall in employment levels, which has hit a record low, according to the survey.

The manufacturing sector and the banking sector, two major US employers, continue to offload employees even as they wind up unit after unit.

The saving grace so far has perhaps been the US Treasury's bank-capital injections and Federal Reserve support for the commercial paper market. But the manufacturing sector by and large has been outside the purview of the relief package.

The  jobless rate, now at a 14-year high of 6.5 per cent, will climb to 7.5 per cent by the end of 2009, according to the median forecast. Last month, the group anticipated it would peak at 6.4 per cent by the middle of next year.

A majority of respondents said the the UK and the whole of euro area, Japan, Canada and Mexico are either now, or soon will be, in recession.

Japan, the world's second largest economy, has officially fallen into a recession. Japan's gross domestic product contracted 0.4 per cent in Q3 after declining 3.7 per cent in Q2, official data showed.

The world's three major economies, US, Japan and the the EU's euro zone, are now in recession. The 15-nation euro zone reported a 0.2 per cent contraction in Q3 following a similar decline for Q2.

Germany sank into recession last week after government figures showed its gross domestic product dropped by 0.5 per cent in the third quarter, following a 0.4 per cent drop in the previous quarter.

Forecasts for German economic growth varies from the government panel's zero per cent to a 0.6 per cent drop in growth predicted by  economists at Bank of America.

Recession in the UK is expected to be Britain will be tougher and longer, according to the Confederation of British Industry, which has warned that the economy would contract by 1.7 per cent next year. It also forecast the number of jobless to rise to 3 million or around nine per cent in 2010.

The CBI also cut its growth predictions for the current year to 0.8 per cent from 1.1 per cent.

The chamber expects UK's GDP to contract by 0.1 per cent (quarter-on-quarter) in the July-September period.

Italy-s economy also contracted by -0.4 per cent and -0.5 per cent in the last two quarters, while Spain's GDP declined by 0.2 per cent from a quarter ago.

The Netherlands and Portugal have reported zero growth.

The Organisation for Economic Cooperation and Development (OECD) has already said the group countries were slowing down and expects the slowdown to deepen.

While the OECD and the Euro areas were experiencing a strong slowdown, things are not bright for the BRIC region either - China was close to a downturn; Russia and India have already slowed down and there was a possibility of Brazil also seeing a downturn.

It is likely that the after effects of the downturn in major economies reach the poor countries with a time lag. The question now is how soon will the global economy come out of the recession.