Irish economy faces record downturn

From 2008 to 2010 Ireland is to suffer the largest contraction of any industrialized country since the 1930s, think-tank predicts. The Irish gross domestic product will fall by 11.6% from 2008 to 2010, the Economic and Social Research Institute, ESRI, forecast in a statement released Wednesday. "By historic and international standards, this is a truly dramatic development," ESRI, an independent institute partly funded by the finance ministry, announced. "Prior to this, the largest decline for an industrialized country since the 1930s had been in Finland, where real GDP declined by 11% between 1990 and 1993," the statement said. Ireland, beaten by the global economic downturn, was the first Euro-zone nation to feel the recession in the beginning of 2008. The ESRI welcomed efforts by the Irish government to deal with billions of euros in risky property loans which have battered the country's banking sector. The ESRI expects Ireland to be obliged to cut 300,000 jobs before 2011 as the recession extends. The think-tank also predicts that the rate of Irish unemployment during 2010 will average 17%. According to the report, by the end of next year, living standards in Ireland will be lower than in 2007.

Read more...

New data signal US economic recovery

US consumer confidence rises and home prices continue to fall, reviving hopes that the US economy is on the road to recovery. Home prices declined 18.6 percent in February compared with one year earlier, the Standard & Poor's/Case-Shiller Home Price Indices said on Tuesday. This was the first time in 16 months that the annual decline was not a record. The S&P/Case Shiller index records prices in 20 of the largest cities in the US. Separately, the Conference Board said its sentiment index had climbed to 39.2 this month, up from a revised 26.9 in March. The reading was the highest since November 2008. Analysts believe the two reports are signs of recovery for the world's largest economy. They however argue that huge problems in the financial sector and severe job losses are still preventing an economic turnaround. The Labor Department said last week that the number of Americans filing applications for jobless benefits had reached a record high of 640,000 in the week ending April 18, up from a revised 613,000 the previous week. On a monthly basis, house prices were down 2.2 percent, from a 2.8 percent fall in January. The index is down 30.7 percent compared with its peak in mid-2006. As of February, average home prices are now at levels similar to where they were in the third quarter of 2003.

Read more...

Global stocks fall on swine flu fears

Global stocks have fallen further amid concerns over the US banking system and mounting fears over a swine flu pandemic. The MSCI world equity index fell 1.4 percent, extending Monday's losses after seven weeks of gains, and the FTSEurofirst 300 index dropped more than 2 percent. The decline comes after The Wall Street Journal reported that US regulators have told Bank of America Corp and Citigroup Inc they may need to raise more capital following the initial results of stress tests on 19 US banks. Futures on the US S&P 500 pointed to a weaker start in Wall Street. The World Health Organization (WHO) has raised its alert level on swine flu to a phase four, or two steps short of the first full pandemic in 40 years. Alert level four means the virus is showing a sustained ability to pass from human to human and is able to cause community-level outbreaks. New cases of the virus were confirmed in New Zealand and Israel on Tuesday. Britain, Canada, Spain and the US have also confirmed cases but so far the deaths have not spread beyond Mexico, where the outbreak began. Mexico has raised the number of probable deaths to 152, with 1,614 suspected sufferers under observation.

Read more...

GM receives another $2B in loans

US automaker General Motors has received another $2 billion in government aid to add to its working capital, the Treasury has announced. On Tuesday, the US government agreed to lend up to $5 billion to GM as the giant automaker faces the possibility of bankruptcy. GM has already received more than $13 billion in emergency loans from the US government. The automaker announced on Thursday that it would halt production at some US factories for up to nine weeks starting next month in a move which would provisionally cut the pay for as many as 55,000 American autoworkers. The US government has given GM until June 1 to complete restructuring plans or file for bankruptcy, after President Barack Obama's administration rejected a proposal by the company in late March. Separately, Chrysler and its Canadian union reached an agreement on pay and benefits intended to cut costs and keep the automaker from bankruptcy. Under the new agreement, the Canadian Auto Workers (CAW) agreed to cut a range of benefits, an annual Christmas bonus, and add flexibility to work rules that would make it easier for Chrysler to hire temporary workers. The agreement would help Chrysler save an estimated 240 million Canadian dollars ($198.2 million) in annual labor costs. The deal should be approved by the 8,000 CAW-represented workers this weekend. Chrysler has until April 30 to reach agreements that would cut its debt and labor costs and seal a partnership with Italian carmaker Fiat, in order to secure more government funds to help it survive.

Read more...

G20 London decisions 'assessed' in Washington

World finance chiefs are meeting to assess the progress on combating the worst global economic crisis since the 1930s Great Depression. On Friday, the Group of Seven industrialized nations and the Group of 20, which includes the G7 and developing countries such as Brazil, China, India and Russia, were holding back-to-back gatherings in Washington on the eve of the IMF and World Bank spring meetings. "Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," a statement issued after finance ministers of the G7 met behind closed doors on Friday said. "Economic activity should begin to recover later this year amid a continued weak outlook and as downside risks persist," the statement added. Finance chiefs at the G20 meeting in Washington will assess the progress made in the three weeks since the G20 leaders pledged in London to fight the crisis with stimulus measures and with the reform of financial sector regulations.

Read more...