ECONOMY

UBS sees Greece in recession, blames deficits

Investment bank UBS predicts that Greece’s economy will go into recession next year, showing negative growth of 0.1 percent. The forecast comes in contrast with the European Commission’s autumn report, released earlier this week, which forecast that the Greek economy will expand at an annual pace of 2.5 percent next year, slowing from 3.1 percent in 2008. UBS said the recession is expected to come about due to Greece’s dependence on foreign funds during these difficult current conditions. The Greek economy will not be able to pick up pace easily unless the situation with the deficits (budgetary and current account) does not change, according to the Switzerland-based bank. On the brighter side, the report says that the Greek banking system is healthy, with relatively low lending. However, banks have extensive exposure to high-risk emerging markets at a time when risky investments should be avoided, it added.