...The global recession is proving much deeper than anticipated. Recent data have revealed that economic activity and trade declined very abruptly in the last three months of 2008, with the scale and synchronicity of the downturn in production in the advanced economies unmatched by anything seen since the first oil shock in the early 1970s. A widespread collapse in consumer and business confidence in the wake of the intensification of the global banking crisis likely played an important role, alongside a dislocation in the process of trade finance. While Fitch does not expect the pace of decline witnessed in Q408 to continue on a sustained basis, there are as yet few concrete signs of improvement in Q109. And many of the key drivers of the downturn remain in place. Most significantly, US households are deleveraging and retrenching at a pace more rapid than witnessed at any time since WWII in response to a sharp acceleration in job losses, ongoing declines in asset prices and tight credit conditions....
