When the Seven Years of Plenty Came to an End…

(Export Development Canada – Peter G. Hall)

Few believe that the standard New Year greeting applies to things economic. The shellshock of last fall’s seismic financial and economic shifts has worn off, and turned into abject pessimism about the near-term future. Bleak stuff to start the year with. What should we be prepared for?

Global growth will be much slower. This is already guaranteed by sharply weaker late-2008 activity, as it has flattened momentum heading into 2009. Forecasts have been scaled back radically, and will come under further scrutiny as the final numbers for 2008 are released.

But there’s more bad news in store. Expect to see harsh headlines, and on a number of fronts. First, the slow, steady global slowdown has reached emerging markets, but aggregated economic data are still murky. The decidedly downward direction of recent data movements suggests that we are in for some sobering GDP releases in the coming months. What is more, as the reality of slower activity sets in, the adjustment process is sure to weigh further on economic growth. Read more here.