22 theSun | THURSDAY DECEMBER 11 2008

business news

World
Bank
forecasts
deeper
gloom
WASHINGTON: The World Bank offered
a grim forecast for global growth next
year as new data from Japan yesterday
confirmed that the situation in the
world’s second-largest economy is
rapidly getting worse.
The bank forecast slowing growth
of just 0.9% for the world economy
and said global trade volume would
fall 2.1%, as the financial crisis takes
its toll on rich and poor nations around
the world.
“The outlook for the world economy
has deteriorated significantly and the
global recession will be broader and
deeper than previously anticipated,” it
said in a statement.
Economies in developing countries
would likely expand at a reduced annual
pace of 4.5% while wealthier, developed
economies are expected to contract
0.1%, it said.
“The global economy is at a cross-
roads, transitioning from a sustained
period of very strong developing coun-
try-led growth to one of substantial
uncertainty,” World Bank chief economist
Justin Lin said.
The report came amid a slew of more
bad news from companies and countries
worldwide.
Canada’s central bank said the Cana-
dian economy had slid into a recession.
In a further sign of the slowdown hit-
ting Asia, official figures in Japan showed
that core machinery orders, a key gauge
of corporate capital spending, fell by
4.4% in October.
On Tuesday, Tokyo said the Japanese
economy shrank 0.5% in the third quarter
– 1.8% on an annualised basis and even
worse than initially estimated.
Chinese authorities meanwhile asked
domestic airlines to cancel or postpone
aircraft deliveries due in 2009 as pas-
senger numbers fall. Rio Tinto cuts global
“The global economic gloom is hav-
ing an increasingly grave impact on the headcount by 14,000
development of China’s civil aviation SYDNEY: Anglo-Australian mining giant Rio Tinto will
industry,” the country’s Civil Aviation slash thousands of jobs globally to cut its debt by US$10
Administration said in a statement. billion (RM37 billion) as it battles falling mineral prices and
The International Air Transport Asso- a worldwide slowdown, it said yesterday.
ciation forecast that airlines would likely The company said it would cut 8,500 contractor and
lose US$2.5 billion (RM9.25 billion) in 5,500 employee roles as it moves to reduce its debt by
2009. the end of 2009 to counter the rapidity and severity of
“We face the worst revenue environ- the global financial crisis.
ment in 50 years,” Giovanni Bisignani, “Given the difficult and uncertain economic conditions,
the chief executive of the Geneva-based and the unprecedented rate of deterioration of our mar-
association, said. kets, our imperative is to maximise cash generation and
In Germany, a major casualty of the pay down debt,” chief executive Tom Albanese said.
liquidity crisis, property lender Hypo “We will minimise our operating and capital costs to
Real Estate, said Tuesday it would get appropriately low levels until we see credible and mean-
€30 billion (RM141 billion) in state loan ingful signs of a recovery in our markets, but will retain
guarantees. our strategic growth options,” he said in a statement.
British data showed manufactur- The global miner, which had been the object of a
ing output sank 1.4% in October from hostile takeover bid by BHP Billiton until the rival walked
September, the eighth monthly drop in a away from the deal last month, said it will reduce its net
row, and was down 4.9% on a 12-month capital expenditure guidance for 2009 from US$9 billion
basis, the Office for National Statistics to US$4 billion (RM33.3 billion to RM14.8 billion). – AFP
said.
The monthly fall was the largest since Investors sceptical about
March 2005.
On Wall Street, the Dow Jones Indus- Sony revamp
trial Average sank 2.72% on Tuesday, TOKYO: Investors reacted coolly yesterday to Sony
ending a two-session winning streak. The Corp’s plans to slash about 16,000 jobs and shut plants
Nasdaq shed 1.55% and the Standard & to cope with the financial crisis, as analysts warned
Poor’s 500 index lost 2.31%. the revamp may not be radical enough.
EU leaders were to put the final Sony shares ended up 1.1% at 1,917 yen, lagging
touches to their own economic stimulus behind the benchmark Nikkei index which rose 3.2%,
plans at a summit starting today. The a day after the electronics icon unveiled plans to cut
European Commission wants them to 8,000 each of permanent and temporary jobs.
agree to pump €200 billion (RM940 bil- “We think further reforms are essential,” Goldman
lion) into Europe’s economy. Sachs analyst Yuji Fujimori said.
The White House said an agreement “We believe these measures are insufficient to
was in sight with Congress on a pack- change the business model. Sony has been discount-
age of US$15 billion (RM55.5 billion) to ing products recently, presumably in an attempt to
rescue US automakers from a collapse reduce LCD TV and digital camera inventory.”
that would imperil millions of jobs. Sony aims to save US$1.1 billion (RM4.1 billion) a
“We are still working through a year from the overhaul, which comes as Japanese
number of issues,” White House spokes- electronics makers reel from slumping profits. – AFP
man Dana Perino said. – AFP