With the U.S economy currently expiriencing a recession other countries may not be far behind. Japan, Britain, Spain, Singapore which together represent about 12 percent of the world’s economy are equally vulnerable as fallout from the U.S worsens their economic weaknesses. Even emerging markets including China are likely to suffer from exports to the U.S diminish.
The developing slump has put pressure in the Japan, U.S and the euro region to follow the lead of federal reserve chairman Ben S. Benmake who in the 1st quarter of 2009 accelerated interest rate cuts in the U.S with an emergency move to lower the bench mark by 3 quarters of percentage point
The effect of the U.S recession which according to the IMF represents about 21 percent of the total economy is spreading via multiple channels. There is less spending by american consumer and companies are reducing demand for imported goods. The meltdown of the U.S.subprime mortgage market has pushed up credit cost worldwide and forced European and Asian banks to write down billions of dollars in holdings. Tumbling U.S.stocks prices are also dragging down market elsewhere.