European Central Bank can have Impact on Solution of Recession in U.S., Says Alfa Bank Expert

Business Materials 3 April 2008 16:29 (UTC +04:00)
European Central Bank can have Impact on Solution of Recession in   U.S., Says Alfa Bank Expert

Azerbaijan, Baku, 3 April / corr. Trend A. Badalova/ The threats of recession in U.S. economy is getting sharper day by day. Ben Bernanki, the head of the Federal Reserve System (FRS), addressing the Economic Committee of U.S. Congress, admitted the possibility of recession for the first time. According to him, GDP of the U.S. will grow with very low rates in the first half of the year and it can even further go down. Furthermore, the International Monetary Fund (IMF) estimated that the growth rates of world economy will do down up till 3.7%. According to IMF estimations, the possibility of recession makes up 25%.

According to Nataliya Orlova, the senior economist of Alfa Bank, two main factors will have an impact on the further development of the situation. First of them is the drop in the interest rate of European Central Bank (ECB).

"At present, only FRS has lowered the interest rates while supporting the financial markets as well. If ECB confirms the possibility of lowering interest rates in April summit of G7, it will be of great importance," she said to Trend on 3 April.

The meeting of the ministers of finance and heads of G7 Central Banks will be held on 12- 13 April in Washington. Regulation of the situation after the crisis of mortgage financing will be the subject of discussions.

According to Orlova, the second factor is connected with the market of China. The dynamics of development of Chinese market will affect the further development of the situation.

"Though the export to U.S. has decreased, China is looking for other sales markets which most likely will be the Middle East. In case of the diversification of sales market of China, the recession will not be that critical," she said.

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