No end to slump in sight for British, Japanese economies

December 27, 2008
A homeless man sits on the street in central Tokyo Friday. Japanese unemployment rose to 3.9 percent in November from 3.7 percent in October amid a recession in Asia’s biggest economy.

Britain next year faces its biggest recession since World War II, a research group said Friday, as Japan reported a record plunge in production in a gloomy runup to 2009 for the world economy.

Britain’s GDP will shrink by 2.9 percent in 2009 and could contract by as much as 10 percent, the Center for Economics and Business Research (CEBR) warned in one of the grimmest forecasts yet for the British economy.

“We’re anticipating 2009 to have GDP [gross domestic product] levels 2.9 percent lower than 2008. That’ll be the worst one-year fall in GDP since 1946,” CEBR managing director Mark Pragnell told BBC radio.

The government has predicted a GDP contraction of up to 1.25 percent.

The forecast came after a round of downbeat reports from European retailers on Christmas sales.

Shopkeepers in Athens said they would defy unions and open on Sunday after disappointing sales in the run-up to Christmas.

In Britain, stores were touting discounts of as high as 90 percent in a bid to attract shoppers in the post-Christmas sales after a November which was down on 2007.

There was more grim economic data out of Japan, the world’s second biggest economy, where production in November fell at the fastest rate on record as a slump in demand forced firms to close plants and cut jobs.

And Thailand’s new prime minister, Abhisit Vejjajiva, told AFP in an interview that the downturn would be “tougher” for his country than the 1997 Asian financial crisis because of combined political and economic problems.

“Last time the crisis began here and spread out. This time we are feeling the effects from the crisis that had happened outside,” said the new premier, an economist who came to power amid political turmoil on December 15.

“And while we have good financial health, it’s the real sector that will come back to hurt the financial sector,” he added, outlining a 300-billion-baht [US$8.6-billion] stimulus plan that he said would help Thailand recover.

Meanwhile Japan said its output plunged 8.1 percent in November from the previous month, much worse than market forecasts of a 6.7 percent fall and the biggest drop since the government began releasing the statistics in 1953.

“The public, business people and politicians, we all must give our all so that the economy would not nosedive even below its lowest point,” Economy Minister Kaoru Yosano said, warning that the end to the slump was not in sight.

The Japanese yen came under pressure in Asian trade after the discouraging data report. However, Tokyo’s benchmark Nikkei index rose 1.63 percent to a six-week high on bargain-hunting in thin holiday trade.

World oil prices rebounded in Asian trade after tumbling to four-year lows before Christmas. New York’s main contract, light sweet crude for February delivery, rose $1.39 to $36.74 a barrel in afternoon trade.

Source: AFP

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