UK economy contracts more than forecast

The British economy contracted more than previous estimated in the quarter ended March 31, 2009, marking the biggest slump in GDP in five decades, according to the revised government figures released. First-quarter GDP shrank by 2.4% from the final three months of 2008, the Office for National Statistics said in London. Economists had forecast a 2.1% decline. The decline was sharper than the 1.9% initially projected. The quarterly drop was the biggest since 1958. About half the revision was due to the introduction of new construction sector data and the rest due to more complete services sector figures showing a sharper decline. Compared to the first quarter of 2008, GDP dropped 4.9%. The Office for National Statistics previously estimated a 4.1% annual drop. Separately, UK consumer confidence increased to the highest level in 14 months in June as households turned more optimistic that the worst of the global economic recession is over, GfK NOP said. An index of sentiment rose 2 points to minus 25, the strongest result since April 2008, the market researcher said in a statement today in London. The gauge of confidence about the economic outlook for the next year climbed 8 points to minus 8.

Premature to say global downturn has bottomed out: S&P

Although financial markets appear to be coming out of a deep freeze, it remains early to say the global slowdown has bottomed, said Standard & Poor's Ratings Services in a report.

The report, titled "Fiscal Health Of Asian Sovereigns If 'Green Shoots' Wither," is a "what-if" scenario analysis, looking at potential evolutions of selected Asian sovereign fiscal performance over the next few years in two scenarios.

One scenario is Standard & Poor's baseline projections of economic development, in which Asian economies recover sometime in 2010 after steep declines in many of them.

"In this scenario, the negative impact on sovereign credit ratings would be minimal, with the possible exceptions of those currently with a negative outlook-- Thailand, Vietnam, and India," said Standard & Poor's credit analyst Kim Eng Tan.

The other scenario is an extended recession, in which most of Asia drags through four consecutive years of contraction. Even in this scenario, which we consider to be remote, our simulation indicates that fiscal pressures are not likely to lead to default although sovereign credit quality in many cases would deteriorate markedly, Tan said.

The results suggest that, unless an investment-grade sovereign makes major policy mistakes, most would remain in that category after an extended-recession scenario, even though their credit ratings could slip by one to four notches.

The resilience of these investment-grade sovereigns, with a few exceptions, stems from their relatively strong fiscal positions prior to the crisis.

"These governments have years of fiscal consolidation and debt reduction, a sounder banking sector with higher capitalization and better risk management, and stronger external liquidity enhanced by more flexible exchange rate regimes," Tan said.

This report is part of a global effort to provide greater trans

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Will the world come to a spectacular and disastrous financial end? Credit markets across the globe, which were flush with liquidity not too long ago, are in a limbo as inter-bank borrowing stands frozen after a series of prominent write-downs, insolvencies and collapses.

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In many ways, India presented the globally leveraged punters with a near-perfect investment story. Here was a nation of a billion people. A nation that was always brimming with talent but had somehow not managed to find its place in the sun. A cheap and seemingly unlimited supply of talented labour, a huge hinterland and mega-cities hungry for the creation of physical and digital infrastructure. A consuming class larger than the population of the United States.

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