Azerbaijan, Baku, 17 April / Trend corr A. Badalova/ Swiss UBS, Europe's second largest bank, forecasts GDP growth in Eurozone to comprise 1.3% in 2009, while for 2008 the forecasts was 1.5%, UBS said to Trend on 16 April.
Italy will experience the least economic growth in the region - 0.8% in 2008, 0.9% in 2009. Netherlands' GDP growth will comprise 2.4% in 2008, but will drop to 1.7% in 2009. Germany's GDP growth will amount to 1.5% in 2008 and 1.3% in 2009.
At last week's meeting, Finance Ministers and the Presidents of the G7 central banks expressed concern on the weakening of the dollar. "Since our recent meeting many currencies have experienced unsteadiness and we are concerned about its impact on economic and financial stability," G7 report said. The CEB administration decided not to change the key interest rate (4%), while the Bank of England cut interest rates by 0.25% to 5%. CEB's unanimous decision aims at counteracting inflation in the Eurozone.
"We believe the ECB is unlikely to cut rates in H1 2008. We therefore push back our call for the first cut to the September ECB meeting. However, we still think the downturn will be severe enough for the ECB to deliver a cumulative 100bp in cuts, with 50bp during Q3 and Q4 08, and a further 50bp of cuts in Q1 09," UBS reported.
"In the UK, we expect 2008 and 2009 to see the weakest economic growth since the recession in the early 1990s. According to our forecast, GDP growth will halve from 3.1% to just 1.5% in 2008. We believe the Bank of England will try to prevent a sharper drop, cutting policy rates by 125bp in total in 2008," the report said.
According to the bank, in Scandinavia, growth rate looks set to slow down too, with a sharp correction looking increasingly likely in Norway. "However, we think Norges Bank will still climb up in April and not lower until H1 09. Sweden's Riksbank should also ease its policy, but by less than the ECB or the BoE - 50bp in total."
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