NEW YORK and LONDON, Aug. 15, 2012 — BNY Mellon Chief Economist Richard Hoey said the worst of the global slowdown is occurring right now and he continues to expect a global growth recession in 2012 with global GDP to grow at three percent. Hoey also expects a moderate strengthening of global economic indicators in late 2012 and 2013, according to his most recent Economic Update.
Hoey states that European policymakers do recognize that it is cheaper to support the basic integrity of the euro than to absorb the severe losses which would be generated by its sudden dissolution. “For that reason, we do expect the euro to survive,” says Hoey. “The euro should continue to include most of its current members.”
While Hoey expects the euro to survive, he believes it is too late to avoid the European recession.
“We believe that Europe is currently in the worst phase of the European recession and the stronger countries can exit recession in late 2012 or early 2013,” Hoey concludes. “We disagree with the disaster scenarios for Europe. However, even after the current European recession ends, we expect a multiyear period of sluggish economic activity, given unfavorable demographics, competitiveness challenges and legacy debt issues.”