Ten countries that are recession-hit

[Sukumar.N]

Policymakers' worst fears have finally come true. The worst financial
crisis in 80 years has weakened the world's major economies, with many
of them heading for recession.

Apart from the US and Japan, the 15-nation eurozone has also
officially fell into recession for the first time ever, as their
economies shrank for a second straight quarter because of the world
financial crisis and sinking demand.

France narrowly escaped, growing just 0.1 per cent in the third
quarter after shrinking in the second quarter, and so have some other
countries. But nobody knows how long can they be that lucky.

Here we take a look at some of the world's major economies in
recession:

United States

The US has finally slipped into recession and the economy is estimated
to shrink 2.6 per cent in the fourth quarter, primarily stoked by
worsening credit conditions.

Moreover, the unemployment rate in the country is expected to reach
7.5 per cent by the end of 2009, says a survey of 50 professional
forecasters, conducted by US-based professional group National
Association for Business Economics between October 28 and November 7.

According to 96 per cent of those surveyed, a recession has already
begun. About half the forecasters estimate that recession - two
consecutive quarters of contraction - started in the fourth quarter of
2007 or in the first quarter of 2008.

In the third quarter, the American economy shrunk 0.1 per cent and is
widely anticipated to witness contraction in the coming months due to
rising job losses, declining consumer spending and lack of credit
availability, among others.

Japan

Japan's economy shrank 0.1 per cent in the third quarter, sending the
world's second-biggest economy into recession for the first time in
seven years and lagging market expectations for anaemic 0.1 per cent
growth.

The contraction confirmed the global financial crisis has sabotaged
growth in yet another major economy, with the euro zone already in
recession, using the most common definition of two consecutive
quarters of contraction.

The government also revised the second-quarter contraction to a larger
0.9 per cent slide, the biggest quarterly drop for Japan's economy in
seven years, and Taro Saito, a senior economist at NLI Research, saw
more dark days ahead for the Japanese economy.

Japan's gross domestic product figure translated into an annualised
fall of 0.4 per cent, lagging a consensus market forecast for a 0.3
per cent expansion, government data showed. In a sign the global
economic slowdown was dealing a blow to Japanese companies, capital
expenditure fell 1.7 per cent in July-September.

Britain

It's official now. Britain is also in recession. A forecast published
by the Ernst & Young Item Club claims that Britain is now in a
recession that will last for 12 months, with only a weak recovery in
2010.

Peter Spencer, the chief economist at Ernst & Young, said the economy
fell sharply in the previous quarter and will shrink for three more
quarters before bottoming out in the latter half of 2009. Meanwhile,
GDP will drop by 1 per cent next year (the first negative growth for
16 years) and will grow by just 1 per cent in 2010.

Meanwhile, the British Chambers of Commerce has also said that it is
pretty dismal and there is going to be a recession. Britain has been
on the brink of recession since the end of June, when the economy came
to a standstill with official growth at zero.

As the government struggles to avoid a recession, economist Roger
Bootle believes that interest rates in the UK could fall below the 2
per cent mark, the lowest figure since the Bank of England was
established in 1694.

Hong Kong

Hong Kong slipped into recession in the third quarter as exports were
hit by weakening global demand and consumption was hurt by a drop in
asset prices and concern about the economic outlook.

Third-quarter gross domestic product shrank 0.5 per cent, seasonally
adjusted, from the previous quarter.

Compared with a year earlier, GDP grew 1.7 per cent, well below an
expected 2.6 per cent increase, and the government slashed its full-
year growth forecast to between 3 and 3.5 per cent from a range of 4
per cent to 5 per cent.

The economy's performance in July-September was the weakest since the
SARS outbreak hammered consumer and business confidence in the spring
of 2003 and highlights Asia's vulnerability to a global economic
downturn.


Singapore

Singapore officially slid into recession in October after falling
consumer demand from the US and Europe hammered its manufacturing
exports.

Its economy contracted by 6.3 per cent in the third quarter, on an
annualised seasonally adjusted basis, having shrunk by 5.7 per cent in
the second quarter of 2008.

This forced the government to cut its growth forecast for this year
from 4-5 per cent to 3 per cent.

Singapore's economy, which is heavily dependent on exports to the
developed world, was one of the first in Asia to be hit by a global
economic slowdown.


Germany

Germany, the largest euro economy, shrank 0.5 per cent in the third
quarter as its main source of growth - exports - dropped and it could
no longer rely on household demand to power the economy.

The Federal Statistics Office reported that German gross domestic
product contracted 0.5 per cent in the third quarter - more than the
0.2 per cent decline that had been anticipated. That follows a decline
in the second quarter of 0.4 per cent, a slight revision from the 0.5
per cent drop previously announced.

German economic activity had got off to a good start in 2008,
expanding by 1.4 per cent in the three months to March. But the
country has been hit by slumping activity in its major export markets
while domestic consumption has remained at low levels. Corporate
investment has suffered as well from a sharp decline in the business
outlook.

In October, German business confidence hit its lowest point in more
than five years, a widely-watched survey by the Ifo research institute
showed.

Italy

Italy has officially slid into a recession as the euro zone's third
biggest economy shrank 0.5 per cent in the third quarter from the
previous three months, its sharpest quarterly decline since the end of
1998 and the same rate of decline reported by Germany, Europe's
biggest economy.

Italy's economy has been hit by slowing consumer spending in the face
of rising fuel and food prices.

The Rome-based ISTAT said consumer prices are up 4.1 per cent and that
consumer spending for the year would grow just 0.1 per cent if it is
assumed to remain unchanged for the rest of the year.

Before the release of the official data, Italy's main business lobby
Confindustria had already declared Italy in a recession.

Estonia

Estonia's economy shrank again in the third quarter - by an annual 3.3
per cent, thus clocking up the second-worst performance (after Latvia)
in the 27-nation European Union.

Estonia and Latvia now lead the Eastern European slowdown, following
repeated warnings over the past year of about the risks of an economic
'hard landing', warnings which were not unfortunately headed due to
hopes that the eurozone itself would hold out against the US downturn.

Estonia's economy is contracting the second fastest, since Latvia's
economy shrank 4.2 per cent in the third quarter, and currently has
the worst growth rate in the EU.

Latvia

Latvia's economy shrank 4.2 per cent in the third quarter, and
currently has the worst growth rate in the EU.

Its economy has entered a period of deep recession after three years
of stellar growth, when it led all EU members in gross domestic
product growth.

Latvia's Prime Minister Ivars Godmanis has also said that the once
vibrant 2004 European Union newcomer will fall into sharp recession
next year, saying he expected the economy to contract by 1 per cent.

The International Monetary Fund expects the Latvian economy to shrink
by 2.2 per cent in 2009 from its prediction of 0.9 per cent negative
growth this year.


Ireland

Ireland officially fell into recession in September itself. According
to the Central Statistics Office, its once-aggressive economy
contracted by 1 per cent in the first six months of the year. Dubbed
the Celtic Tiger during massive growth in the late 1990s, the business
sector is now facing its most difficult period since high unemployment
and emigration hit the 1980s.

The Department of Finance recently pointed to the crumbling property
market and the international credit crunch for the alarming figures. A
government spokesman said: "As expected, lower levels of new house
building had a major restraining influence on growth in the second
quarter, as is evident from the very weak investment figures.

Other factors at work include higher commodity prices, global
financial market problems, weak demand in our major trading partners
and adverse exchange rate movements."


N.Sukumar
Research Analyst
www.kences1.blogspot.com