Recession a `real risk` if oil tops $150: Bank of America
Baku, March 10 (AZERTAC). Economists at Bank of America Merrill Lynch were ready to upgrade their global growth forecast until political unrest in North Africa and the Middle East sent the price of west Texas intermediate crude upward, from the US$85 a barrel range to roughly US$105 in the span of a month.
BofA Merrill Lynch informed clients in a note Wednesday that the oil-price surge has persuaded its economists to trim its global GDP forecast for this year and next by 10 basis points - to 4.3% from 4.4% in 2011 and to 4.8% from 4.9% in 2012. It has also boosted the global inflation forecast for this year to 3.9% from 3.7%, but left the 2012 expectation of a 3.4% boost in prices unchanged.
The investment house also expects central banks in key emerging markets — especially in Latin America, Eastern Europe and the Middle East — to raise interest rates at faster pace than first anticipated.
“Even with this forecast revision, the risks around growth are heavily skewed to the downside,” the economists said. “If the production shutdown spreads outside of Libya, we will be revisiting our forecast again and if oil prices go above their historic peak of about US$150 a barrel on a sustained basis, a global recession becomes a real risk; at US$200 a barrel a recession seems almost certain.”
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