World Bank Cuts Economic Outlook, Says Europe Is In Recession, Warns Developing Economies To "Prepare For The Worst"

This will hardly be a surprise to anyone with 3 neurons to rub across their frontal lobe, but at least it is now official.

• WORLD BANK CUTS GLOBAL GROWTH OUTLOOK, SEES EURO-AREA RECESSION

Bloomberg, which just released an embargoed summary of the World Bank action, summarizes it all.

• World Bank cuts global growth forecast by most in 3 yrs as euro area recession threatens to exacerbate slowdown in emerging markets, World Bank says in Global Economic Prospects report.
• Sees world economic growth of 2.5%, down from June est. of 3.6%
• Sees euro area GDP contracting 0.3% in 2012, compared with pvs est. of 1.8% growth
• World Bank estimates euro area entered recession in 4Q
• U.S. outlook cut to +2.2% from +2.9%
• Japan forecast cut to 1.9% growth from 2.6%
• China’s GDP growth will slow to 8.4%, unchanged from interim revised projection released in Nov.
• India forecast cut to 6.5% from 8.4%

And the punchline:

• World Bank urges developing economies to “prepare for the worst” as it sees risk for European turmoil to turn into global financial crisis reminiscent of 2008
• Even achieving much weaker outcomes is very uncertain

Morgan Stanley may want to revise their 37% Muddle Through probability outcome, to something more like 36.745% on this news. ...link