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Analysis: World in recession, worldwide job cuts
Published on Tue, Nov 18, 2008 at 07:40, Updated on Tue, Nov 18, 2008 at 14:58 in Business section
Tags: Financial Crisis, Citigroup , Washington
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Washington: Japan became the latest major economy to fall into recession and Citigroup said on Monday it would cut 52,000 jobs, one of history's largest layoffs, stoking fears the global economic slump is worsening.
After a weekend meeting of the Group of 20 advanced and emerging economies failed to come up with specific new 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 per cent of its workforce in a bid to return to profitability.
The cuts come on top of 23,000 reductions Citigroup had already announced and lag only the 60,000 layoffs by IBM in July 1993 as the largest ever, according to outplacement firm Challenger, Gray & Christmas Inc. After stock markets closed, the US Treasury said it had completed equity purchases in 21 more banks totaling $33.56 billion, including $6.6 billion in US Bancorp
Life insurers also joined the long list of companies seeking funds under Washington's $700 billion financial bailout program. Seeking to contain the economic fallout for the US auto industry, Democratic lawmakers proposed a politically potent plan to bail out big American car firms.
But its passage is uncertain even with millions of jobs at stake. Automakers have taken the brunt of the impact from a dramatic decline in US consumer spending, triggered by the housing crash and worsened by rising unemployment. Germany said it was ready to guarantee funds for General Motors' Opel unit. Even Japan's Toyota came under ratings scrutiny as signs of recession spread across the globe.
The United States fell into a recession in April and the downturn is expected to last 14 months, with unemployment reaching 7.7 per cent this year, according to a survey of private forecasters by the Federal Reserve Bank of Philadelphia.
That would be the longest contraction since the 16-month recession that ended in 1982, according to the National Bureau of Economic Research. The organization has not declared a recession this year, in part because output expanded in the second quarter, fueled by economic stimulus plan 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 are to meet in 2008. In Britain, the main employers group forecast that joblessness could rise to almost 9 per cent by 2010, and France's central bank said the French economy should contract 0.5 per cent in the fourth quarter.
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iT WOULD TAKE ATLEAST A MINIMUM OF 6 MONTHS, AND A MAXIMUM OF 24 MONTHS FOR THE
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