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To: SliderOnTheBlack who wrote (92287)	7/14/2001 4:53:52 PM
From: Frank Pembleton	Read Replies (2) \| Respond to of 95453

Global recession is on, Wall Street economist declares Roach points to world's 2.4% GDP growth James Baxter Southam News OTTAWA - No doubt about it, we are now in a global recession, a leading Wall Street economist reported yesterday. "We have been warning of this possibility since the start of the year, but now it's time to make it official ... the global economy is in recession," Stephen Roach, Morgan Stanley's chief economist, said in his submission to the investment bank's daily economic outlook, entitled A World in Recession. Mr. Roach, who has earned a reputation as one of the biggest bears on Wall Street over the past 18 months but also as one of its most accurate forecasters, said the International Monetary Fund defines a global recession as occurring when the world's Gross Domestic Product growth drops below 2.5%. He said new data show 2001 world GDP growth estimates to be for 2.4% growth, what he calls the "smoking gun of the global recession call." "First came last fall's spike in energy prices," Mr. Roach said. "Then came the most devastating blow of all -- an unwinding of the U.S. [information technology] boom. Another downleg in world equity markets added insult to injury, especially in wealth-dependent economies such as the United States. "The rest is now history -- an inventory correction, the earnings carnage, intensified corporate cost cutting and global reverberations of these largely American-made shocks. It was only a matter of time before the world economy crossed into recession territory. That time is now." Canadian economists admit Mr. Roach is known not only for his pessimism, but also his accuracy. "I think you should take the themes in Roach's work with a good degree of seriousness," said Russell Sheldon, senior economist for the BMO Nesbitt Burns. "We're certainly headed toward [a global recession]. Whether we'll head it off is another question." Mr. Sheldon said his firm is still "firmly on the fence" when it comes to predicting an all-out global recession. He said the U.S. consumer remains confident Federal Reserve chairman Alan Greenspan will be able to pull the American economy out of its dive, but that is countered by ominous signs of in-fighting and paralysis among European central bank and its various finance ministers. "Europe looks like a really slow train wreck materializing," Mr. Sheldon said, adding North America is not looking too good. "There's no question that the latest data show the labour markets weakening, and hiring and firing patterns deteriorating much more broadly than in just manufacturing. So we've taken one more small step in the wrong direction in the last few weeks, especially in the United States, but even in Canada the employment numbers were relatively soft."