WASHINGTON (November 18 2008): Japan became the latest major economy to fall into recession on Monday and Citigroup said it would cut 52,000 jobs, one of history’s largest layoffs, adding to worries the global economic slump is worsening. After a weekend meeting of the world’s 20 largest economies failed to come up with specific new stimulus measures to ease the world’s financial strains, the IMF said it needed at least $100 billion in extra funding to fight the crisis. Citigroup, the US bank with the farthest global reach, announced the biggest round of job cuts since the financial crisis erupted last year, slashing 15 percent of its workforce in a bid to return to profitability.

The cuts come on top of 23,000 reductions Citigroup had announced earlier and only lags behind 60,000 layoffs by IBM in July 1993 as the largest ever, according to outplacement firm Challenger, Gray & Christmas Inc.

In a bid to contain the economic fallout, the US Senate debated a bailout of American car firms, Germany said it was ready to guarantee funds for General Motors Corp’s Opel unit, and Japan’s Toyota came under ratings scrutiny. Automakers have taken the brunt of the impact from a dramatic decline in US consumer spending, triggered by a housing crash and worsened by rising unemployment.

CREEPING GLOBAL RECESSION: The United States fell into recession in April and the downturn is expected to last 14 months with unemployment rising to 7.7 percent later this year, according to a survey of private forecasters by the Federal Reserve Bank of Philadelphia survey.

That would be the longest contraction since the 16-month recession that ended in 1982, according the National Bureau of Economic Research, the arbiter of US business cycles. The organisation has not declared a recession, in part because output expanded in the second quarter, fuelled by stimulus payments. A top Senate aide said another stimulus plan was not likely to be approved during Congress’ post-election session this week, the last time lawmakers meet for this year.

Britain’s main employers group forecast that joblessness could rise to almost 9 percent by 2010, and France’s central bank said the French economy should contract 0.5 percent in the fourth quarter. The euro zone is already in recession, usually defined as an economy shrinking for two consecutive quarters.

Japan surprised markets with data showing the world’s second-biggest economy fell into its first recession in seven years as the worst global financial crisis since the Great Depression curbed demand for exports. The 0.1 percent contraction in July-September was worse than forecast.

“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. China’s central bank said the risk of a downturn in its economy were on the rise, and also warned that the global slowdown could hurt its exports.

International Monetary Fund Managing Director Dominique Strauss-Kahn told the BBC his organisation would likely need at least $100 billion in extra funding over the next six months to help countries survive the downturn.

MARKET WOES AND CAR TROUBLE: Global stock markets shuddered under the joint strain of declining economies and ructions in the financial system. Major US stock indexes were mixed after steep losses on Friday.

Oil dropped as concerns about demand offset the impact of evidence of Opec output cuts and the hijacking of a Saudi Arabian supertanker by Somali pirates. Economic concerns supported safe-haven demand for government bonds, on both sides of the Atlantic. Markets were unimpressed with the weekend meeting of the G20 in Washington, which agreed on some steps to tackle the world economy but left it to individual governments to tailor their response to their own circumstances.

“The economic outlook is worrying and no solution has been found short term. People are expecting things to get worse as economic data continues to look poor and, in the absence of anything else, that is helping to push prices lower,” said Simon Wardell, analyst at economic consultants Global Insight.

The G20 statement said all financial markets, products and participants would be subject to supervision. It also vowed tougher accounting rules, a review of compensation practices and greater co-operation between national regulators. Finance ministers were told to develop specific plans, with the first set of actions to be completed by the end of March and a follow-up meeting held by the end of April.

With a $700 billion fund promised to stabilise the battered US financial system, the outgoing Bush administration and its successor were set to tackle the urgent question of rescuing the nation’s “Big Three” automakers. The Senate began debating emergency legislation to provide $25 billion in aid to General Motors Corp, Ford Motor Co and Chrysler LLC.

The German government said it was ready to guarantee funds for ailing carmaker Opel, the first European carmaker to turn to a government for help, but any money it provides to the GM unit must stay in Germany. Japanese car giant Toyota Motor Co was put on a negative ratings watch by Fitch Ratings because of the global downturn and the stronger yen. It cited “unprecedented challenges” in the automotive industry. Toyota is one of the rare companies to have a top-notch “AAA” rating.

Similar Posts:

• Citigroup to cut more than 50,000 jobs, stock falls
• EU leaders agree on $264 bn stimulus package
• Singapore economy to remain weak in 2009: MAS
• Japan economy may not grow until 2010
• Asia stocks drop
• Asian stocks drop as US auto bailout fails
• Dollar falls low against yen
• The year 2008—worst for the global economy
• Asian markets continue to slide
• Toyota to cut global sales target