The deepest and longest global recession in the world's postwar history was close to reaching the bottom, with the US expected to see a turnaround by the second or third quarter of the year and Europe by the fourth quarter of this year or early next year.

China had most likely already started its recovery, IHS Global Insight chief economist Nariman Behravesh said on Thursday.

Behravesh added that the forecast 6,5% growth in China's gross domestic product (GDP) for 2009 was, in essence, a recession for this economy, which had grown by double digits in past years.

This recession was the world's first truly synchronised economic downturn with all regions being affected, regardless of whether an economy or region was strong or a basket case, Behravesh and IHS Country Analysis and Forecasting executive MD Zbyszko Tabernacki agreed.

Behravesh said that, contrary to popular belief, the US alone was not responsible for the global recession. The US's subprime crisis was rather a symptom of the larger global imbalances, he asserted.

He commented that before the crisis started there had been too much credit growth and risk taking everywhere, while some countries had been addicted to debt-led growth, while others had been addicted to "export-led" growth.

This had led to great vulnerability especially for countries where exports as a percentage of gross domestic product exceeded 30%.

Further, Behravesh said that if it had not been for certain policy mistakes, primarily made by the US and the Eurozone, the recession would have been a mild one.

He believed that the policy mistakes made by the Eurozone had included inflation fear induced tightening of monetary policy, even after the onset of the financial crunch, as well as the fact that the Bank of England and the European Central Bank had not cut interest rates until growth was already collapsing.

The US government-sanctioned collapse of financial services firm Lehman Brothers and its $85-billion rescue of insurance firm, American International Group, were seen as two big policy mistakes made by the US, which had exacerbated the crisis, he noted.

Meanwhile, any economic recovery for an economy would be highly dependent on that country's policy responses, said Behravesh.

However, he said that the mixed signs and volatility in economic data was a good thing, potentially signalling that a bottom had been reached.

There were a number of forces that would drive a recovery for many economies, one of which was much lower commodity prices. This would be good news for much of the industrial consuming economies.

Further, the financial rescue packages made available by some economies had eased some tension in financial markets, while robust monetary and fiscal stimulus packages would benefit many economies.

In addition, there was also pent-up demand, which would be released once the worst of the crisis was over. Behravesh explained that many businesses and individuals were saving money owing the uncertainty in the economy, but once confidence picked up again, this money would be spent again.

A winding down of the global inventory correction would also assist in the start of a recovery, although any recovery would not necessarily be strong, he said.

Behravesh expected the global economy to show a weak or no recovery in 2010, while a much stronger rebound was expected in 2011.

The US, China and India were likely to recover from the crisis first, he added, noting that the big challenge going forward would be for the US to become less dependent on consumer spending and more on export-led growth.

The majority of other nations, however, would have to increase its dependence on domestic consumer spending and decrease its dependence on export-growth.

Otherwise, the world's growth pattern would go back to the way it was before the crisis, with imbalances remaining.

Behravesh expected the US consumer to also start saving more, but he questioned who would pick up this slack.

Tabernacki said that this global rebalancing would require the emergence of Asian consumers, who should start using their savings to improve their living standards and spend more on buying products from their own region.

REGIONAL GROWTH

Meanwhile, Behravesh noted that emerging Europe had been one the hardest hit regions.

This region would likely take a long time before it could recover, with its main exports markets in recession and tight credit conditions threatening domestic demand.

The outlook for other emerging markets in the medium term were positive, with China's growth expected to start rebounding gradually and moderately when the world demand started to recover in 2010, said Behravesh.

India's economy would reach five-year lows, but growth would rebound in 2010 as the private sector began to respond to lower prime lending rates and global demand and capital inflows started improving.

Africa's growth had, meanwhile, mostly been hampered by the collapse in world trade and demand for commodities, and not so much on bad debt.

The global liquidity squeeze would continue to hurt investment projects, while tourism in the region would also be impacted on.

However, Behravesh expected activity in the region to come close to what it had been before the crisis.