Economy Log: 06 Jul 09
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World Bank Sees Deeper Recession
Dealing a blow to the hopes of economic recovery, the World Bank said in a report that the world economy will contract 2.9 per cent, compared with a previous forecast of 1.7 per cent decline. The Washington-based lender also cut its forecast for the US this year, predicting a 3 per cent drop in the world’s biggest economy, compared to March’s projection of 2.4 per cent contraction. The euro area’s economy may shrink 4.5 per cent, compared with the previous estimate of a 2.7 per cent contraction, and global trade may drop by 9.7 per cent, compared with a previous forecast of a 6.1 per cent. The bank also said while the world is set to return to growth in the second half of 2009, the recovery will be subdued. The lender encouraged countries to take “bold” actions to hasten a rebound.
In contrast to the World Bank forecast, the Organisation for Economic Cooperation and Development (OECD) raised its forecast for the economy of its 30 member nations. The combined economy of these countries will shrink 4.1 per cent this year and grow 0.7 per cent in 2010.
THE JOB MARKET
General Motors: The auto maker plans to eliminate about 4,000 salaried jobs by 1 October this year. The reductions will also include executive jobs.
Standard Chartered: The British bank announced it had cut 2,500 jobs. The jobs have been eliminated as part of the bank’s cost-control programme.
Widening crack: India’s budget deficit may widen to 7 per cent of gross domestic product, a 19-year high, in the current fiscal as the government borrows more to compensate for dwindling tax receipts, Credit Suisse Group says.
Sensex story: India’s benchmark stock index, the world’s fifth-best performer this year, may rally another 15 per cent over the next nine months as valuations offer “reasonable upside”, JPMorgan Chase & Co. says.
Positive view: India’s economy may come back to a 9 per cent growth rate in the next two years as stimulus packages revive demand, Commerce Minister Anand Sharma says.
Trading lows: World Trade Organization head Pascal Lamy has said there is no good news in global trade data and that the contraction in world trade volume this year is likely to be greater than expected.
Silver lining: The US economy shrank at an annualised rate of 5.5 per cent in the first three months of 2009, better than previously thought, government said. The GDP was estimated to decline at a rate of 5.7 per cent.
Collective effort: British Airways said almost 7,000 employees have applied for voluntary pay cuts to help the carrier control the slump in revenues.
$49 billion. The losses that Ireland’s banks face in 2010, the International Monetary Fund said.