World financial crisis

Global economies officially enter recession

Article published on the 2008-11-13 Latest update 2008-11-13 16:19 TU

The hall of the MICEX stock exchange is seen in Moscow
(Photo: Reuters)

The OECD on Thursday said the world's leading industrialised nations are now in recession and predicted that the economies of Japan, Europe and the US would shrink until the middle of next year. The group also predicted a 2.8 per cent drop in the US economy in this year's final quarter.

The statement by the Paris-based group comes ahead of Saturday's summit in Washington that will bring together the G20, the world's most developed and developing nations.

On Wednesday, US Treasury Secretary Henry Paulson announced that the US government would no longer buy up so-called "toxic assets". Instead, he said, the 700 billion dollar (558 billion euro) rescue package would be used to buy up stock in struggling US banks, providing them with the liquidity needed to loosen up lending.

Richard Werner of the University of Southampton in the UK says the move shows that Paulson "realised that 700 billion is not enough money". He says the Treasury Secretary "is running out of money already. Basically half of that is spent - of the 700 billion - and now he has to think very carefully about how he spends the other half."

 

Elsewhere in the finance world

China: Chinese banks committed to loans of several billion dollars on Wednesday. But on Thursday, the US casino company Sands said 9,000 construction jobs were to be lost following its decision to halt a project in Macau worth 12 billion dollars. The company blamed poor access to financial credit.

Germany: The Frankfurt stock market rose slightly on Thursday despite the announcement on Thursday by Germany that its economy has entered a recession.

Holland: The state is to inject 750 million euros into the banking and insurance group SNS Reaal after the company lost 88 million euros in the third trimester this year. The EU on Thursday appoved a separate ten billion euro injection into the banking and insurance group ING.

India: Inflation has fallen to just under nine percent, down almost two per cent, as consumer demand drops around the world.

Japan: Stocks fell for the third day in a row on Thursday ahead of the G20 meeting at which Japan is to lend 100 billion dollars to the International Monetary Fund. The country's biggest department store on Thursday reduced its profit forecast saying that sales in its shops had dropped by as much as ten per cent.

Kuwait: A court on Thursday ordered that trading be suspended on the country's stock market. The closure came after the exchange had lost 1.8 per cent. The Kuwaiti market has lost 100 billion dollars during the current financial crisis.

Russia: The county's two biggest stock markets stopped trading on Thursday after they dropped sharply on opening.

Taiwan: Loans of over 18 billion US dollars were announced on Thursday to help the country's biggest companies. The government said the loans would be provided by banks but that the central bank would step in if the lending institutions ran out of money.

UK: British Telecom has announced 10,000 job cuts over the next five months. The majority of the jobs will be lost in the UK.

Vietnam: Prime Minister Nguyen Tan Dung said on Thursday the country will continue to lower interest rates after it scaled down its growth forecast to 6.5 per cent for this year. The Prime Minister said a slowdown in lending was presenting difficulties for businesses and producers.

Zimbabwe: An upcoming summit of the African economic group Comesa has been postponed to early next year. It is to be held in Victoria Falls in northwestern Zimbabwe but the country's Trade Minister Obert Mpofu said the 19 members of Comesa needed more time to prepare the summit.