Recession spreads to Japan, IMF needs more money

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LONDON/TOKYO, Nov 17 (Reuters): Japan became the latest major economy to fall into recession Monday with France close behind, and the International Monetary Fund (IMF) said it needed at least 100-billion-dollar to fight the billowing economic crisis enveloping the world.
The US Senate, meanwhile, was to begin debating a bailout for the battered US auto industry later in the day. Germany was to hold talks with General Motors unit Opel.
In something of a surprise, Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports.
The 0.1 per cent contraction in the world's second-largest economy in July-September was worse that consensus forecasts.
The Eurozone is also in formal recession, with two consecutive quarters of contraction, Britain and the United States are on the brink and China is slowing sharply.
Britain's main employers group forecast Monday that unemployment could rise to almost three million by 2010 while France's central bank said that the French economy should contract 0.5 per cent in the fourth quarter.
Policymakers have little doubt that their economies have not finished declining.
"We need to bear in mind that (our) economic conditions could worsen further as the US and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings," Japanese Economy Minister Kaoru Yosano told a news conference.
IMF Managing Director Dominique Strauss-Kahn told the BBC that his organisation was likely to need at least $100 billion in extra funding over the next six months in order to help countries out of the mire.
Financial markets continued to shudder under the joint strain of declining economies and ructions in the financial system. Oil fell more than $1 to below $56 a barrel and MSCI's main world stock index was down half a per cent for a 46-per cent year-to-date loss.
Leaders of the world's 20 largest economies, meeting in Washington over the weekend, agreed on a host of steps to rescue the global economy.
But they left it to individual governments to tailor their response to their own circumstances and troubled industries.
The post-meeting statement from the group of major industrialised and developing countries contained a laundry list of reform pledges aimed at soothing volatile markets and calming consumers' worries.
"This weekend's Group of Twenty (G20) summit failed to deliver any new stimulus measures to rescue the world economy from the current recession, but at least it avoided the knee-jerk responses (such as rushed regulation) that would have made things worse," Julian Jessop at London-based Capital Economics said in a report.
"This weekend's G20 summit failed to deliver any new stimulus measures to rescue the world economy from the current recession, but at least it avoided the knee-jerk responses (such as rushed regulation) that would have made things worse," Julian Jessop at London-based Capital Economics said in a report.
The G20 statement said that all financial markets, products and participants would be subject to supervision, vowed tougher accounting rules, a review of compensation practices and greater cooperation between national regulators. Even the long-running Doha round of free-trade talks was given a new lease on life.