The US economy will achieve a flat growth rate in the best scenario in 2009 and may contract into 2010 in the worst case, UBS global economist Larry Hatheway said in a recent interview with Xinhua.

With the US economy in the midst of recession, it is quite reasonable to assume that the slowdown would persist into the spring of 2009, with gross domestic product (GDP) shrinking on a calendar average basis of 1.2 percent next year, Hatheway said viae-mail.

However, with concerted policy efforts, in particular the recapitalization of the banking system and the promise of fiscal stimulus from the incoming Obama administration, US growth might well turn positive in the second half of 2009 and allow the full year average growth rate to be flat.

But if the policy moves prove to be insufficient and the fiscal stimulus too "back-loaded," the US economy could contract into 2010, Hatheway warned.

Hatheway attributed the recession to a number of interwoven factors.

"It is correct to say a system of incentives, with long roots in US economic and financial policy, gave rise to an unsustainable increase in leverage and asset prices in residentialreal estate," he said.

"When the bubble finally burst, the consequences were so severe as to produce the ongoing credit crunch and global recession."

Facing distinct challenges of its own, the Chinese economy would register a 7.5-percent growth in 2009, Hatheway said.

Hatheway said that with the recession deepening and spreading to more parts of the world economy, it would be logical to assume that oil prices will be under pressure for longer.

He predicted that over the next six months or so, strong demand for US dollar liquidity and worsening growth expectations in the rest of the world would provide support for the dollar. Over longer time periods, he said, the dollar remains a vulnerable currency.

"The economies that emerge soonest and with the most vigor from recession will enjoy strong currencies," he said.

Asked if he were to write a book about the economy in 2008, what the title would be, Hatheway suggested: "The Great De-leveraging of 2008: From Financial Crisis to Recession."

(Xinhua News Agency January 4, 2009)