"Should anything bad happen in early 2005, there's little doubt that we'll tip into outright recession in the U.S., and the U.S.-centered global economy," Roach said.

"There's a risk of a 40 percent chance of that happening for next year, and we're now extremely worried about the global outlook for 2005," he said.

Roach said the outcome of the U.S. presidential election makes little difference to the difficulties faced by the world's largest economy.

"The U.S. and the global economies are now inflicted by significant imbalances that are considerably worse than what they were four years ago," Roach said.

"It's all personified by America's balance of payments deficit, which is 5.7 percent of U.S. gross domestic product and rising sharply further as we speak."

The twin deficits on the budget and current account are major concerns for economists and policy makers. They expect the deficits to swell further over the next few years.

Morgan Stanley projects the global economy will expand 3.6 percent next year from an estimated 4.8 percent this year, while the U.S. GDP is expected to be up 3.5 percent from 4.5 percent this year.

But there are significant downside risks to these forecasts, Roach said.

"The problem is compounded by the pressure of sharply rising oil prices, which further exacerbate the downside pressure on the U.S. and the global economy."

Copyright 2004 by United Press International