Mr Gundzick predicted that China’s economic growth will gradually decline to six percent after having gained a two-digit growth in recent years. The increased value of its yuan currency against the US dollar will partly ease the impact of inflation on its economy due to the soaring prices of energy and food.

Japan – another world economic power – is expected to see a slowdown in its economy standing at 1.5 percent due to stagnant exports. Apart from importing energy, Japan relies on maize imports from the US to support its meat production industry. Based on its energy and cereal imports, economists forecast that the Japan Central Bank will hike its currency Yen against the US dollar to control the inflation rate.

Meanwhile, the Republic of Korea (RoK) is also expected to grow by only one percent in 2007. Like Japan, the RoK is a major maize importer of the US.

Economies in South Asia and Southeast Asia will also shrink significantly as economists are increasingly worried about political instability in the two regions, which affect investment activities.

A decline in the US economy in 2007 will also affect economies in Latin America. However, several regional countries such as Venezuela, Ecuador and Argentina are predicted to benefit from the soaring prices of commodities.   

Europe, however, will suffer less impact from the global gloomy economy. According to economists, the European Union will continue to tighten monetary policy to prevent its currency Euro from devaluating. The inter-dependence among EU member economies will help the region reduce impacts caused by a slow-down in other economies, but the European stock market will also have to adapt itself as strongly as the US stock market.