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Global Economic & Market Outlook

• Although the increased importance of BRICs in the global economy suggests that a significant US slowdown will not derail the world economy, global growth is due to moderate in 2008, as Japan and the Euro area will be hit by slowing exports to the US and a weaker dollar.
• Triggered by a deeper housing recession, we recognize more downside risks to economic growth in the US. The tightening of credit conditions and the ongoing labor market deterioration have led us to revise our US real growth forecast to 1.8% y-o-y in 2007 (down from 2%) and to 1.7% in 2008. The risks are on the downside, as the probability of a recession in the US has increased significantly to nearly 60% in Q4 07.