IMF says world in recession, auto giants flop

Thursday, April 23, 2009 at 9:20 PM Posted by Beijing News


The International Monetary Fund painted a bleak picture of the world economy on Wednesday as top auto companies posted dismal results and Britain revealed massive debts and soaring unemployment.

The IMF forecast the global economy will contract a punishing 1.3 percent this year and see a slow recovery in 2010, with Japan, the 16-nation eurozone, the United States and the former Soviet Union region particularly hard hit.

China and India are still set to grow by 6.5 and 4.5 percent respectively.

"The global economy is in a severe recession inflicted by a massive financial crisis and acute loss of confidence," the IMF said in its six-monthly World Economic Outlook WEO report.

The IMF warned the outlook was "exceptionally uncertain," and risks could increase, estimating that the world economy was sliding into "the deepest post-World War II recession by far."

In a speech ahead of key global finance talks in Washington, US Treasury Secretary Timothy Geithner said the United States needed the rest of the world economy to recover and was not solely to blame for the crisis.

"We bear a substantial share of the responsibility for what has happened, but factors that made the crisis so acute and so difficult to contain lie in a broader set of global forces that built up" in recent years, he said.

The IMF's gloomy report came as Britain warned its public borrowing would balloon to a record 175 billion pounds 197 billion euros, 256 billion dollars in 2009-10 -- almost double its previous level.

Britain's unemployment rate also jumped to 6.7 percent -- the highest level since the Labour Party came to power in 1997, weakening the government ahead of elections to be held by next year.

Even Roman Catholic leader Pope Benedict XVI stepped into the debate over global economic policy, telling followers in St Peter's Square in the Vatican that "greed" was at the heart of the crisis.

"This crisis was born out of greed," the pontiff said.

There was more encouraging news from Asia however, with Japan reporting that a slump in its exports was easing. The news came after new data from China also raised optimism that the Asian powerhouse may be enjoying a recovery.

"Exports have hit bottom," said Richard Jerram, chief Japan economist at Macquarie Securities. "The stage is set for a strong rebound in industrial production and exports in the second quarter of 2009," he predicted.

Tokyo's finance ministry said exports dropped 45.6 percent in March from a year earlier, following a record 49.4 percent dive in February.

In Europe, however, there was more gloom for the auto industry, with Germany's Volkswagen reporting a 74-percent fall in profits and an 11-percent slump in sales in the first three months of the year.

VW said its performance was "extremely weak," adding: "The high volatility of market developments does not permit any reliable forecasts to be made."

French auto maker Peugeot Citroen reported its first quarter sales fell 24.9 percent and said the outlook for 2009 was "uncertain" while Sweden's Volvo Group, which has announced thousands of layoffs, cut 1,543 more jobs.

"We are in an exceptionally deep and widespread global recession."





Edmonds

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