Affluent investors will suffer from a slowing U.S. economy in 2007, one that will continue to be outpaced by emerging markets such as China, according a new study by UBS Wealth Management. The report predicts U.S. growth will drop from 3.4 percent this year to 2 percent next year, while China’s will slip from 10.2 percent to 9.1 percent.

In its latest UBS Global Outlook, the multinational bank’s wealth advisory group forecasts that several countries will buck the trend of a worldwide slowdown in real GDP growth. While global growth will slip from 5.1 percent to 4.5 percent in 2007, nations such as Brazil (3.2 percent to 4.0 percent) and Russia (6.7 percent to 7.4 percent) will thrive.

The study attributes the U.S. slowdown to the continued correction in the real estate market; this depressed growth will affect other regions such as Europe, where the growth rate is estimated to slip from 2.7 to 1.7 percent. A decline in European government spending and higher interest rates will also shackle that area.

Many emerging markets will be hampered by tepid economic conditions in the U.S. and around the world, along with slowing commodity price increases and rising global interest rates. But the UBS study remains optimistic about the ability for some developing nations to weather these difficulties, based on improved economic fundamentals. Brazil, for example, now boasts an account surplus for one of the few times in the past 30 years.

The study forecasts some slowdown in China due to a tightened money supply. With interest rate hikes only now beginning to show real effects, however, UBS also foresees a soft landing that will permit China to retain the highest growth rates of any of the 16 countries measured in the study.

—Andrew Farrell