PARIS: European and Japanese officials yesterday warned the global downturn would worsen despite hopes that US president-elect Barack Obama could galvanize the world’s largest economy with a new stimulus plan.
Fresh reports out yesterday also painted a gloomy picture, with Japan announcing its worst car sales since 1974 and the iconic Irish china and crystal maker Waterford Wedgwood saying it was on the verge of bankruptcy. Economic uncertainty means “it’s quite possible that the recovery won’t start until the beginning of 2010,” European Central Bank Vice President Lucas Papademos told German weekly WirtschaftsWoche in an interview published yesterday.
That warning came as Japanese Finance Minister Shoichi Nakagawa said that Japan had been hit by a rare downturn in global financial markets and that the prospects for the second biggest economy in the world were getting worse.
“The Japanese economy has experienced falling exports and production. Consumption has also turned stagnant and the economy is worsening,” he said. Japan has been officially in recession since September last year after the country’s gross domestic product (GDP) shrank for two consecutive quarters. Greater optimism about the US economy, however, was sufficient to boost the Tokyo stock market on its first day of trading in 2009, with the benchmark Nikkei index closing up 2.07 percent after a disastrous performance in 2008. “Stocks are gaining support from the stronger stock market in the United States and expectations of a recovery in the US economy this year,” said Makoto Sengoku, a market analyst at Tokai Tokyo Securities. In Germany, Europe’s biggest economy, the fractious governing coalition discussed a new economic stimulus plan potentially worth tens of billions of euros (dollars) in a bid to stave off the country’s worst post-war recession.