Credit Suisse Group AG cut its euro-area and U.K. economic growth forecasts for this year and 2012, citing a deteriorating outlook.
Gross domestic product in the euro region will probably expand 1.7 percent in 2011 and 1 percent next year, compared with previous forecasts of 2.3 percent and 2.5 percent respectively, Credit Suisse economists including Christel Aranda-Hassel and Neville Hill in London said in an e-mailed note to clients dated yesterday.
They also lowered their U.K. growth forecast to 1 percent this year and 1.5 percent in 2012, compared with previous predictions of 1.5 percent and 2.5 percent.
“It is now clear that the political uncertainty and financial turbulence of the past two months has had a negative impact on business confidence and activity in Europe,” they wrote in the report. “We now expect output growth in both the euro area and U.K. to be more or less flat in the second half of this year.”
The euro area and the U.K. “are likely to skirt recession” and growth is likely to accelerate through the course of next year, the economists said.
“A prolonged period of weak growth should keep the central banks from tightening from here,” they wrote, referring to the European Central Bank and the Bank of England. “But unless these economies sink back into recession, or there is a substantial financial accident, we don’t anticipate any easing in monetary policy.”
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