Global Companies Suffer as Recession Rears Ugly Head - Recession Prompts Stimulus
(
Page 2 of 2 )
RECESSION PROMPTS STIMULUS
While trillions of dollars in bailouts may have averted a banking
collapse, the economic outlook is grim, prompting governments to put
together fiscal stimulus packages to ease a recession born of the worst
financial crisis in 80 years.
"The horizon that this forecast offers is dark ... recession is a
real risk," EU Monetary Affairs Commissioner Joaquin Almunia said after
the European Commission forecast euro zone growth of just 0.1 percent
next year.
A technical recession is defined as two successive quarters of contraction.
Official data supported Almunia's prognosis.
Euro zone manufacturing activity sank in October to a record low.
The Markit Eurozone Purchasing Managers Index slumped to 41.1 -- the
lowest in the survey's 11-year history.
Berlin aims to safeguard 1 million jobs with pump-priming measures
to be agreed in cabinet on Wednesday, by spending more than 30 billion
euros.
South Korea announced plans to pump an extra $11 billion into its
economy next year. Finance Minister Kang Man-soo said economic growth
could fall to its lowest in more than a decade without the stimulus,
which will need approval by parliament.
Policymakers will gather again to plot their next moves.
Euro zone finance ministers meet in Brussels to discuss reform of
institutions that manage the global financial market and bodies such as
credit rating agencies, accounting rules-setters, banks and their
management.
And finance chiefs from the "Group of 20" nations gather in Brazil
later this week to prepare for a U.S.-hosted November 15 summit of
world leaders to chart a way out of the crisis.
RATE CUTS COMING
Central banks will also put their shoulders to the wheel.
Following rate cuts from the Fed, China and Japan last week, the
European Central Bank, Britain and Australia are expected to cut
interest rates by at least 50 basis points this week.
The efforts to buoy the world economy encouraged some investors to
shop for bargains after world stock markets fell 20 percent in October,
their worst month ever.
The MSCI index of stocks in the Asia-Pacific region outside Japan
rose 5.9 percent, European shares were flat and U.S. stocks were
slightly higher in afternoon trade.
(Editing by Elizabeth Piper and Steve Orlofsky)
© Thomson Reuters 2008 All rights reserved
Infrastructure 
