WORLD> America
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WORLD> America
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Recession rears ugly head, global auto sales shrink
(Agencies)
Updated: 2008-11-04 10:28 Recession Prompts Stimulus While trillions of dollars in bailouts may have averted a banking collapse, the economic outlook has prompted governments to put together fiscal stimulus packages to ease a recession born of the worst financial crisis in 80 years.
In Jerusalem, Jeffrey Lacker, president of the Richmond Federal Reserve Bank, said the US economy was contracting. Data last week showed it shrank at a 0.3 percent annual rate in the third quarter, its sharpest contraction in seven years. "I think it's definitely a recession at this point. How deep, how steep and long it's going to be is uncertain," said Lacker, who will become a voting member of the Fed's interest rate-setting committee next year. Another Fed official, Dallas Federal Reserve President Richard Fisher, in an interview with Bloomberg Television said inflation risks had emphatically diminished. "I don't see any economic growth through 2009 ... Inflationary forces have just subsided. In fact, they were vaporized," he said. "The horizon that this forecast offers is dark ... recession is a real risk," EU Monetary Affairs Commissioner Joaquin Almunia said after the European Commission forecast euro zone growth of just 0.1 percent next year. Official data supported Almunia's prognosis. Euro zone manufacturing activity sank in October to a record low. The Markit Eurozone Purchasing Managers Index slumped to 41.1, the lowest in the survey's 11-year history. Berlin aims to safeguard 1 million jobs with pump-priming measures to be agreed in cabinet on Wednesday, by spending more than 30 billion euros. South Korea announced plans to pump an extra $11 billion into its economy next year. Finance Minister Kang Man-soo said economic growth could fall to its lowest in more than a decade without the stimulus, which will need approval by parliament. Policymakers will gather again to plot their next moves. Euro zone finance ministers meet in Brussels to discuss reform of institutions that manage the global financial market and bodies such as credit rating agencies, accounting rules-setters, banks and their management. And finance chiefs from the "Group of 20" nations gather in Brazil later this week to prepare for a US-hosted November 15 summit of world leaders to chart a way out of the crisis. French President Nicolas Sarkozy said he hoped that the summit would be productive. The aim of the gathering was to come up with "swift, concrete decisions and the definition of a road map for the coming weeks." But the White House cast some doubt on the chances that concrete decisions on reforms would emerge. "We just need to get closer to the meeting to see what we're going to be able to work out," said White House spokeswoman Dana Perino. "I think it's appropriate at the first meeting to set up the principles for reform, and then task those working groups to go back, (and) work with their financial experts in their countries ... to figure out a way that we can continue to move forward." |
