International finance leaders delivered a grim forecast for next year on Sunday, warning that next year could be even worse than this one despite a slew of government stimulus plans.
IMF chief Dominique Strauss-Kahn predicted a “very dark” year that could be worse than expected if states failed to take sufficient action to fight the crisis facing economies big and small.
“Our forecasts are already very dark, but they will be even darker if not enough fiscal stimulus is implemented,” he told BBC radio in London, predicting recession for advanced economies and decreasing growth for emerging ones.
“I can see that some measures have been announced, but I’m afraid it won’t go far enough,” he said.
The IMF has called for global fiscal stimulus of about 2 percent of GDP, equivalent to roughly US$1.2 trillion.
The governor of the Bank of Spain was even more pessimistic, warning the world faced a “total” financial meltdown unseen since the Great Depression of the 1930s.
“The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview with Spain’s El Pais newspaper.
He noted that the inter-bank lending market was not functioning, spawning “vicious” cycles with economic activity among consumers, businesses, investors and banks essentially frozen.
“There is almost total paralysis from which no one is escaping,” he said.
Still, there was fresh movement to stop the meltdown, with a decision by US president-elect Barack Obama to boost by 500,000 jobs a 3 million job creation goal to kick start the world’s biggest and ailing economy.
US vice president-elect Joseph Biden also confirmed the Obama team was working on a second economic stimulus package, which could top US$1 trillion, some media reports said.
“What we’re doing is putting together what we think will be the economic package that will do two things. One, stem the hemorrhaging of the loss of jobs, and begin to create new jobs,” Biden told ABC television’s This Week program. “At the same time, we provide continuing liquidity for the financial markets.”
Biden put no firm figure to the package that would follow the US$700 billion Wall Street rescue deal signed by US President George W. Bush in October — and which has failed to reverse the plummeting US economy.
“There’s going to be real significant investment, whether it’s US$600 billion or more, or US$700 billion. The clear notion is, it’s a number no one thought about a year ago,” he said.
In Europe, the Luxembourg subsidiary of embattled Icelandic bank Kaupthing got a rescue offer from a group of Arab investors, the Luxembourg government has confirmed.
“Besides the signature of the Belgian state, this agreement needs the acceptance of the creditor banks,” the government said in a statement on Saturday about the offer.
Kaupthing Luxembourg was placed in suspension of payments in October following the near collapse of Iceland’s once-booming financial sector under the weight of the worldwide credit crunch. Deposits in both Luxembourg and Belgium have been frozen ever since.
At least one German banker, however, thinks the doom-and-gloom forecasts are overblown.
“Some compare the situation to that of 1929, others talk about the worst crisis in near memory,” said Wolfgang Sprissler, head of the German bank HypoVereinsbank in an interview with the Sueddeutsche Zeitung to appear yesterday.
“It bothers me that the institutes in their studies try to outdo each other with more pessimistic scenarios,” he said, adding that what is needed is signs of “optimism.”
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS