http://www.morganstanley.com/views/gef/index.html#anchor6025
The risk of dual recession is mounting. Our US economics team is already calling for capex-induced negative GDP growth in successive quarters (Jan-Mar, Apr-Jun), for a technical minor recession in the first half of the year by definition. We are forecasting that Japan will cling on to a modicum of growth in the Oct-Dec 2007 quarter, boosted by external demand, but there is a possibility that, like the US, that quarter will mark the peak and the economy will retreat in Jan-Mar.
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Our China team believes that if signs of a pullback appear, the authorities could loosen their tight monetary policy and there is still ample scope for fiscal stimulus. The problem though is that taking macro measures once demand has already headed down is like pushing on a string, and frequently fails to achieve the intended effects. If China does fare worse than expected, the risk that a dual recession could escalate into a triple recession would come into play.
