Global growth seen weak as lending stagnates
Global growth will be very weak next year, a senior European banker warned on Tuesday, and loans to companies and household in the euro zone stagnated, raising new concerns about the extent of the credit crunch.
Japan was reported to be considering a $110 billion scheme to buy bad loans from banks, the latest in a series of government moves aimed at fighting the worst downturn since the 1930s.
Japanese stocks finished modestly higher on their last trading day of 2008, capping a grim year which saw the Nikkei index plunge 42 percent, the biggest loss in its 58-year history, as recession fears battered global markets.
In Europe, the main stock markets were on track for a 46 percent loss over the year when trading ends on Wednesday.
“Problems in financial markets are affecting the real economy across the world and global growth is expected to be very weak in 2009,” European Central Bank Governing Council member John Hurley said in an article for the Irish Times.
He did not give a global figure but the ECB has already cut its forecast for the euro zone, predicting a 1 percent fall in gross domestic product next year.
Lending to euro zone companies and households stagnated in November, the weakest result on record, bolstering expectations that the European Central Bank will keep cutting interest rates to ward off a deep recession.
“The sharp slowdown in euro zone private sector lending in November is likely to raise concern at the ECB over a credit crunch in the region,” ING Financial Markets economist Martin Van Vliet said payday cash advances.
Retail spending in the euro zone fell for the seventh straight month in December.
The head of the German exporters’ association, BGA, forecast exports will fall next year for the first time since 1993.
Analysts forecast more pain for consumers and investors in 2009 as bleak economic news continued to flood in from around the world, but said hopes of more government rescue packages were helping to shore up financial markets for now.
ECONOMIC STIMULUS
“Everyone’s pinning their hopes on economic stimulus policies by the United States and possibly China,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
The U.S. government expanded its bailout of the auto industry late on Monday, pumping $5 billion into General Motors’ auto and mortgage financing arm GMAC and lending an additional $1 billion to GM to help it buy shares in GMAC, which is considered crucial to GM’s survival.
The loan to GM, the biggest U.S. automaker, would come on top of assistance it was given earlier this month.
Filed under: technology by Wolf