News and Articles

Industrial production in the euro zone fell and Spain reported its worst downturn in 15 years on Thursday, anticipating a grim data to be known tomorrow when the gross domestic product of the major European nations.


Japan highlighted the risk of a damaging deflation, and only China offered some hope, at a time when officials from around the world struggling to keep up their economies to avoid sinking deeper into crisis.

In the U.S., lawmakers negotiated a compromise on Wednesday to 789,000 million dollars for a stimulus package including tax cuts and spending measures.


The objective of this plan is to get the world's largest economy from its worst financial crisis since the 1930s.

But Erkki Liikanen, responsible for a European Central Bank (ECB) warned that it will take plenty of bad news, despite some glimmers of hope.


"I would not say that the worst is past, although in some parts of the financial markets began to see an improvement," he said in an interview on Thursday. "The economic crisis seems to be lasting longer and spreading," he added.

In the euro area, industrial production showed that point, with a record drop of 12 percent in December, Eurostat said on Thursday, the office of statistics.


"The economy deteriorated remarkably at the end of last year after the financial system was on the verge of collapse," said Nick Kounis, an economist at Fortis.

The savings have not yet bottomed out, despite the enormous expense of governments to stimulate the activity and the ECB is facing strong pressure to lower interest rates.


EUROPEAN Recession

Spain reported that its economy contracted 1.0 percent quarter over the last three months of 2008, entering recession for the first time since 1993.


Spain is not alone. Germany, France, Italy and the euro area as a whole reported their figures on Friday gross domestic product (GDP) and it is anticipated that all show greater contraction.

In general, it is expected that the economy of the 16-nation euro zone has contracted by 1.3 percent in the last quarter of last year, significantly worse than a fall of 0.2 per cent in the previous three months.


The ECB has lowered rates to 2.0 percent since October, has hinted that it will respond next month.

Throughout the euro zone, who perhaps suffered the most drastic decrease is Ireland. Finance Minister Brian Lenihan said on Thursday that he would not resign despite a series of scandals, most recently, one on Wednesday to rescue two major banks.


In Asia, Japanese wholesale prices fell 0.2 percent in the year to January, the first fall since December 2003. The data could usher in a period of deflation, as previously predicted that the Bank of Japan, could last two years.

In China, despite the concern of trade figures released on Wednesday, a record increase rates for new loans in January showed that banks respond to the call from the Chinese government to support the economy by extending more credit.

Chinese banks extended new loans of 1.62 trillion yuan in January (237,000 million U.S. dollars), almost one third of what they provided throughout 2008, according to data on Thursday. This revived the optimism that may be near the end of the deep decline in Chinese.

In the U.S., on Wednesday, negotiators agreed on a draft legislative commitment to economic stimulus.

Barack Obama the president wants Congress to act fast while the U.S. economy, battered by recession, are feeling the effect of the collapse of asset prices, the shortage of credit and millions of layoffs.

The stimulus could be passed by both houses of Congress on Thursday.