World economy seen shrinking as G20 meeting looms
Friday, 13 March 2009
The global economy may shrink 1 to 2 per cent this year, World Bank President Robert Zoellick said, as revised Japanese data confirmed the world's No. 2 economy suffered its deepest slump since the oil shock of 1974, reports Reuters.
The latest grim snapshot of the world economy highlights the need for urgent action as G20 finance chiefs prepare to meet in Britain, but doubts have emerged whether they will make much headway due to divisions over how best to fight the downturn.
"We haven't seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times," Zoellick told Britain's Daily Mail.
China, the engine of world growth in recent years, saw industrial output growth shrink to a near standstill at the start of the year, but a continued surge in bank lending in February spurred optimism of a rebound soon.
Asian share markets mostly fell, as a burst of optimism fueled by Citigroup revealing it had been profitable for the first two months of the year proved short lived.
In export-driven Japan, companies such as Toyota Motor Corp and Sony Corp have been aggressively scaling back production and cutting jobs to cope with collapsing demand.
Revised data on Thursday showed the economy shrank 3.2 per cent, or an annualised 12.1 per cent, in October-December, slightly less than the initial estimate.
A rise in inventories led to the slight revision, but analysts said that was nothing to cheer as it reflected slowing demand both at home and abroad and not companies' appetite to produce more.
"The data confirm that Japan's economic state is quite severe. We see a sharp decline in exports, which puts Japan in a bad situation because exports are falling everywhere," said Seiji Adachi, senior economist at Deutsche Securities.
The Nikkei average fell 1.1 percent, after surging nearly 5 percent in the previous session alone.
China's annual industrial output growth slowed to 3.8 percent in January and February from 5.7 percent in December, the National Bureau of Statistics said, the median forecast of 25 economists polled by Reuters was for a rise of 6.4 percent.
New yuan loans in February totalled 1.07 trillion yuan ($157 billion), down from the record of 1.62 trillion yuan in January, but still very high by historical standards, suggesting a recovery in business activity in the months ahead. With 10 months to go in 2009, China is already more than halfway toward reaching its goal of at least 5 trillion yuan in new bank lending.
Finance ministers from the G20 group of rich nations and emerging powers meet this weekend in Britain to prepare for a summit in London on April 2.
Ahead of the meeting, the United States and Britain called on leading economies to ramp up spending to break the recession. But the emphasis on economic stimulus has been met coolly by many European nations, who are more focused on regulatory reform.
The latest grim snapshot of the world economy highlights the need for urgent action as G20 finance chiefs prepare to meet in Britain, but doubts have emerged whether they will make much headway due to divisions over how best to fight the downturn.
"We haven't seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times," Zoellick told Britain's Daily Mail.
China, the engine of world growth in recent years, saw industrial output growth shrink to a near standstill at the start of the year, but a continued surge in bank lending in February spurred optimism of a rebound soon.
Asian share markets mostly fell, as a burst of optimism fueled by Citigroup revealing it had been profitable for the first two months of the year proved short lived.
In export-driven Japan, companies such as Toyota Motor Corp and Sony Corp have been aggressively scaling back production and cutting jobs to cope with collapsing demand.
Revised data on Thursday showed the economy shrank 3.2 per cent, or an annualised 12.1 per cent, in October-December, slightly less than the initial estimate.
A rise in inventories led to the slight revision, but analysts said that was nothing to cheer as it reflected slowing demand both at home and abroad and not companies' appetite to produce more.
"The data confirm that Japan's economic state is quite severe. We see a sharp decline in exports, which puts Japan in a bad situation because exports are falling everywhere," said Seiji Adachi, senior economist at Deutsche Securities.
The Nikkei average fell 1.1 percent, after surging nearly 5 percent in the previous session alone.
China's annual industrial output growth slowed to 3.8 percent in January and February from 5.7 percent in December, the National Bureau of Statistics said, the median forecast of 25 economists polled by Reuters was for a rise of 6.4 percent.
New yuan loans in February totalled 1.07 trillion yuan ($157 billion), down from the record of 1.62 trillion yuan in January, but still very high by historical standards, suggesting a recovery in business activity in the months ahead. With 10 months to go in 2009, China is already more than halfway toward reaching its goal of at least 5 trillion yuan in new bank lending.
Finance ministers from the G20 group of rich nations and emerging powers meet this weekend in Britain to prepare for a summit in London on April 2.
Ahead of the meeting, the United States and Britain called on leading economies to ramp up spending to break the recession. But the emphasis on economic stimulus has been met coolly by many European nations, who are more focused on regulatory reform.