Saturday, 22 November 2008

Global economy looking worse

The outlook continues to worsen in the global economy.

Bloomberg reports that the Japanese government has cut its evaluation of the economy for a second straight month.

"The economy has weakened further," the Cabinet Office said in a monthly report in Tokyo today. "Amid a further slowdown in the global economy, the downward pressure on the Japanese economy is increasing rapidly."

The Bank of Japan didn't feel compelled to cut rates on Friday though. From Bloomberg:

The Bank of Japan held its benchmark interest rate at 0.3 percent and said it will consider pumping more money into the financial system to prop up an economy that fell into a recession last quarter.

Governor Masaaki Shirakawa instructed his staff to study new ways of making money available for lending, such as accepting corporate debt as collateral, the central bank said in a statement in Tokyo today. The unanimous rate decision followed a cut from 0.5 percent last month, the first in seven years.

Meanwhile, Europe's economy is also deteriorating. Again from Bloomberg:

Europe's manufacturing and service industries contracted in November at the fastest pace in at least a decade, putting pressure on the European Central Bank to step up the pace of interest rate cuts.

A composite index of both industries dropped to 39.7, the lowest since the survey began in 1998, from 43.6 in October...

Markit's manufacturing index dropped to 36.2 from 41.1 in October, while the services gauge fell to 43.3 from 45.8. Separate figures today showed that French consumer spending on manufactured goods slipped the most in four months in October.

And it's the same in the US. From Reuters:

The Economic Cycle Research Institute, a New York-based independent forecasting group, said the annualized growth rate of its Weekly Leading Index slid in the week ending Nov. 14 from a revised negative 27.1 percent to minus 28.2 percent, a new low according to ECRI data recorded since January 1949...

The WLI level fell to a 13-year low of 108.0 from a downwardly revised 110.1, to match a number not seen since Aug. 25, 1995.

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