Stocks fall as Morgan Stanley downgrades global GDP

| August 18, 2011 | 0 Comments

US banking giant Morgan Stanley today downgraded its forecast for global economic growth, sending stock markets falling throughout the world.

The American bank lowered its expectations for world growth for the 2011 year to 3.9% from 4.5%, while also downgrading 2012 growth to 3.8% from 4.5%.

The downgrade sent shockwaves through stock markets as double-dip fears increase.

Meanwhile, Morgan Stanley criticised US and euro zone Governments for their handling of debt issues, suggesting they could have acted more decisively.

It added that the US and the euro zone are “hovering dangerously close to recession”.

Germany’s Dax ended the day down almost 6%, while France’s Cac was down 5.48%. London’s FTSE was down 4.49% to 5,092.23.

Meanwhile, in the US, the Dow Jones Industrial Average opened 2.2% lower after disappointing jobs data.

Also today, Goldman Sachs revised its forecasts for global growth, now expecting 4% growth this year, down from 4.1% previously.

With both forecasts, the most significant downgrades relate to the US and the euro zone – both of which are struggling with debt crises.

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