HSBC Bank plc says it is lowering its forecast for global growth, indicating that a soft landing for the global economy likely isn’t in the cards.

In a new report, HSBC economists indicate that the developed economies and developing economies are facing conflicting challenges. “In the developed corner, financial meltdown threatens recession and ongoing economic famine. In the emerging corner, overly-loose monetary conditions threaten excessive inflation,” it says, explaining that the rate cuts from the U.S. Federal Reserve Board “are having a pervasive effect on emerging market inflation given the persistence of currency links against the U.S. dollar.”

As a result, it says, “We’re cutting our growth forecasts for the developed world but simultaneously raising our inflation forecasts for the emerging world. Any economic landing is likely to be both hard and bumpy.”

HSBC says it now expects global growth of only 2.6% this year, and 2.5% in 2009. “These numbers compare with increases averaging around 3.5% over the previous four years and suggest a return to very difficult economic conditions,” it says.

However, it has very different outlooks for the developed world, which it sees gaining only 1.5% this year, and 1.3% next year. Whereas growth in the emerging world is expected to average 6.5% this year, and 6.2% in 2009.

“Inflation, though, is a lot stickier than in the past,” it says. “This year marks a new cyclical high for global inflation, coming in at 3.6%. For emerging markets, the inflation news is particularly uncomfortable. We expect inflation within the emerging world to be well above 6% this year, remaining above 5% in 2009.”

While the prospect of a credit crunch-inspired recession is not appealing, HSBC says that the real threat is that the disruption’s impact is, “likely to linger for a painfully-long period of time.”

“Credit crunches associated with banking failure typically take both time and money to fix and we see no reason to think that the U.S. should be any different from earlier crises of this kind,” it says.

In the meantime, it predicts that the Fed funds rate is likely to drop to just 1% by the beginning of 2009. And, it suggests, that other countries are likely to face similar challenges.

“We’re also worried about the UK which, economically, increasingly looks like the U.S.,” HSBC warns. “The UK housing market is in decline, debt levels are high and the financial system is creaking. Correspondingly, the risk of recession is growing.” So, it believes the Bank of England will have to lower interest rates to just 3.5% by the middle of next year.

“The eurozone and Japan aren’t quite in the same boat as the US and the UK, but they’re still sailing through choppy waters,” it says, adding that it expects both the European Central Bank and the Bank of Japan will have to start cutting rates by the summer.