TAWOMG - The R word is back to town

Dear Friends,

As of yesterday the rich world is probably back into recession. The odds are that this quarter and next the economy will contract in a number of developed countries, including many European ones. It could even be that the US also follows suit. We are not exactly back to where we were in October 2008, but the old crisis is far from being away.

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The good news, this time around, is that the world will probably not come into recession. The emerging countries will probably continue to grow, though at a slower pace, but enough to compensate the decline of the richest economies. The commodity exporters will probably be hit harder, considering that many prices started to go down in the past few weeks. Nevertheless the big stars will continue to shine.

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It is still a long way to Tipperary, before debt laden economies deleverage and find the growth path. This will not come without structural reforms. It will be painful for many citizens in the rich countries to adapt to this new reality, but there is no way around it.

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Wish you all a good 4Q and let's hope it's not going to be too nasty out there!

Maurício