GENEVA — A deepening of the U.S. housing and mortgage crisis and a hard landing of the dollar could spark a recession this year and seriously impact the projected slowdown in world output and trade growth, according to two new economic reports.
"A recession in the United States cannot be excluded in the year ahead, and economists are divided whether domestic-led growth in Asian markets can drive the global economy," said a report by the World Economic Forum.
The WEF "Global Risks 2008" report, which draws on input from more than 100 top business leaders, concludes there are fears the current liquidity crunch will trigger a recession in the next 12 months. The report estimates the severity of the cost would be in excess of $1 trillion.
Similar warnings are flagged by the United Nations' "World Economic Situation and Pros-pects 2008" report, which projects global economic growth to moderate to 3.4 percent this year, down from 3.7 percent posted last year. It forecasts world trade to expand by 7.1 percent, down from last year's estimated 7.2 percent increase, and the dollar to depreciate another 5 percent.
The U.S. economy is projected to grow 2 percent, down from last year's estimated 2.2 percent. The European Union economy is forecast to expand by 2.3 percent; China, by 10.1 percent, down from 11.4 percent last year, and India, by 8.2 percent.
However, the U.N. report cautions that, under its more pessimistic scenario, factors such as a deeper U.S. housing slump and an accelerated fall of the dollar by 20 percent could combine to "trigger a worldwide recession and disorderly adjustment of the global imbalances."
The pessimistic scenario "is quite probable if a likely U.S. recession is stronger than expected," said U.N. economists such as Heiner Flassbeck, a former top German economic policy maker.
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)
20-year-old British singer @jorjasmith_ made her debut at Coachella last weekend. We caught up with her and talked about her love for Amy Winehouse, working with Kendrick Lamar on the “Black Panther” album and her fashion philosophy. Read the interview on WWD.com #wwdeye (📷: @katiedaisyla)
Supermodel @helenachristensen teamed up with longtime friend and designer @camillastaerk on a joint @paredeyewear collaboration. The lineup features three styles and 11 offerings, all of which embody a vintage feel. Get all the details on how they celebrated the collab on WWD.com. #wwdaccessories #wwdeye (📷: @slovekinpics)
“It’s a hard industry to keep motivated, as well, so finding different subjects and people is what makes it worth it – when you’re like, oh, I’ve met great people, I feel like I’ve done something good, and I feel proud of having done this,” said French actress Stacy Martin on being grateful for the variety of roles she’s take on. Read @ktauer’s full interview with Martin on her her latest film “Godard Mon Amour.” #wwdeye (📷: @danieldorsa)