Mumbai:
Global financial services firm J PMorgan has forecast recession in the US
as fallout of the sub prime crisis. Although the impact on emerging economies
is likely to be limited, it said, sectors like information technology would be
hit, as it would have a lower demand from companies in the US. "Tighter
credit standards and higher credit costs will slow US growth. J PMorgan has revised
down its fourth quarter for 2007 and first quarter for 2008 US GDP forecast from
2.5 per cent to 2 per cent and from 3.5 per cent to 2.5 per cent respectively".
It has, however,
forecast over three per cent growth for the subsequent quarters next year. The
Indian IT companies have already gone down, he said. Sectors like banks and automobile
also are likely to be affected while sectors like capital goods, steel may do
well, he said Besides,
he said Japan also could contract next quarter. While
a recession in major economies could impact the stock prices in the emerging markets
including India, the impact of recession in the US on the economies of emerging
markets would be limited, he said. "Emerging
market fundamentals appear robust and we believe the impact of US credit problems
on Asia and emerging markets should be limited", he said. Moreover,
Asia''s direct economic exposure to the US has decreased over the last five years
excepting countries like Taiwan and Korea, Mowat said.
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