Grim US jobless numbers have increased the risk of a self-sustaining global downturn with the US, Asia and Europe sliding together, economists say.
The US jobless rate soared to a four-year high of 4.9 percent in August from 4.5 percent in July, the government said Friday, smothering hopes of an imminent US recovery.
The figure stoked fears that job concerns could undermine confidence among US consumers, until now the bedrock of the world's biggest economy, and lead them to slow spending.
"This is yet another indicator that we are heading into a significant downturn," Economic Policy Institute economist Robert Scott said.
Japan announced the same day that its economy, stagnant for a decade, contracted by 0.8 percent in the three months to June from the previous quarter.
In Germany, the biggest economy in the EU, industrial output shrank by 1.5 percent in July. Forecasts for next year's growth in the 12-country euro zone of 2.0 to 2.5 percent are already being cut.
The coincidence of bad news raised concerns that all three engines of the world economy could enter a protracted slowdown, feeding off each others' weaknesses.
"When we get into that kind of cycle it can become self-reinforcing. It can spiral down unless sharp steps can be taken to reverse the cycle," Scott said.
Decisive action by the Group of Seven powers, who meet here this month, may be required to jolt the world back into growth, he said.
In discussions between the G7 nations -- Britain, Canada, France, Germany, Italy, Japan and the US -- Washington would likely press Europe to cut interest rates, Scott said.
"I think the United States will ask Germany, not only Germany but Europe, to sharply lower their interest rates. It is not just a European problem," Scott said.
Japan was limited in its room to maneuver, Scott said, as it had cut overnight interest rates close to zero and was still struggling to keep its own economy afloat.
Asian countries were taking the brunt of the impact from the US slowdown because of their heavy reliance on high-technology exports to the US, said Moody's Investor Service chief economist John Lonski.
"I guess you have to worry more about Asia that supplies a lot of components, electronic and computers to the United States," he said.
In August, Taiwan exports dropped 25.8 percent while South Korea's dived 28 percent, Lonski said.
"Asia is facing a recession risk because of the burst of the Internet and high tech bubble in the United States," he said.
But US Treasury Secretary Paul O'Neill, speaking before the release of the weak employment figures, called last week on Japanese policymakers to do more to help the world.
"It is time for decisive action to turn the Japanese economy around," said O'Neill, who is to visit Tokyo for three days from Tuesday to meet with economic managers.
RULES BROKEN: The MAC warned Chinese not to say anything that would be harmful to the autonomous status of Taiwan or undermine its sovereignty A Chinese couple accused of disrupting a pro-democracy event in Taipei organized by Hong Kong residents has been deported, the National Immigration Agency said in a statement yesterday afternoon. A Chinese man, surnamed Yao (姚), and his wife were escorted by immigration officials to Taiwan Taoyuan International Airport, where they boarded a flight to China before noon yesterday, the agency said. The agency said that it had annulled the couple’s entry permits, citing alleged contraventions of the Regulations Governing the Approval of Entry of People of the Mainland Area into the Taiwan Area (大陸地區人民進入台灣地區許可辦法). The couple applied to visit a family member in
CELEBRATION: The PRC turned 75 on Oct. 1, but the Republic of China is older. The PRC could never be the homeland of the people of the ROC, Lai said The People’s Republic of China (PRC) could not be the “motherland” of the people of the Republic of China (ROC), President William Lai (賴清德) said yesterday. Lai made the remarks in a speech at a Double Ten National Day gala in Taipei, which is part of National Day celebrations that are to culminate in a fireworks display in Yunlin County on Thursday night next week. Lai wished the country a happy birthday and called on attendees to enjoy the performances and activities while keeping in mind that the ROC is a sovereign and independent nation. He appealed for everyone to always love their
‘EXTREME PRESSURE’: Beijing’s goal is to ‘force Taiwan to make mistakes,’ Admiral Tang Hua said, adding that mishaps could serve as ‘excuses’ for launching a blockade China’s authoritarian expansionism threatens not only Taiwan, but the rules-based international order, the navy said yesterday, after its top commander said in an interview that the Chinese People’s Liberation Army (PLA) could blockade the nation at will. The object of Beijing’s expansionist activities is not limited to Taiwan and its use of pressure is not confined to specific political groups or people, the navy said in a statement. China utilizes a mixture of cognitive warfare and “gray zone” military activities to pressure Taiwan, the navy said, adding that PLA sea and air forces are compressing the nation’s defensive depth. The navy continues to
MISSILE MISSION: The Chungshan Institute of Science and Technology said it does not make policy, but would be glad to obtain certification to assemble the missiles The Ministry of National Defense-affiliated Chungshan Institute of Science and Technology is in the process of getting certified to assemble an additional 1,985 Stinger missiles on top of those from US arms sales, a senior defense official said yesterday. Washington is to send a team to Taiwan to evaluate the institute’s manufacturing capabilities and information security, said the official, who commented on condition of anonymity. The ministry initially bought 500 missiles for the army and navy, but later increased the order to 2,485 in response to an increase in Beijing’s military activities around the nation, and to meet the army’s urgent need
RSS