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With demand weakening in the main export markets, a brief contraction in output is possible.
"Few of us could have expected such a sharp contraction in output and the United Kingdom economy now faces the prospect of returning to recession," Davis warned.
"The contraction in output data reconfirms weakening demand both domestically and externally," said Radhika Rao, an economist in the Singapore office of Forecast, a financial market analysis company.
"Such a contraction in output in the first half of 2013 would probably be judged to be a recession," the report said.
"Not tackling the public debt problem decisively at the outset or early in the program created uncertainty about the euro area's capacity to resolve the crisis and likely aggravated the contraction in output," the report states.
However, political opposition made it impossible, and gave private bondholders the time to shift out of Greek debt: As the iMF admits: Not tackling the public debt problem decisively at the outset or early in the program created uncertainty about the euro area's capacity to resolve the crisis and likely aggravated the contraction in output.
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The bursting of the Japanese bubble a decade ago did not lead immediately to sharp contractions in output or a significant rise in unemployment.
In testimony before Congress in June 1999, Mr. Greenspan said: "The bursting of the Japanese bubble a decade ago did not lead immediately to sharp contractions in output or a significant rise in unemployment.
We are looking at some major contractions in output, consumption and employment just at a time when the economic recovery seems to be getting legs.
For their part, the big recessions of 1988–1989 and 1990, associated with periods of hyperinflation and internal conflict, produced contractions in output that were not overcome until 1995.
British manufacturing order books and output grew at their fastest in almost two decades while China, which has suffered a year-long contraction in manufacturing output, saw activity expand in August.
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