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Financial Times: 50 million people will lose their jobs in 2009

January 30, 2009

This is serious. So serious i am numbed to the core. i have no more words to go on.

Economic pain to be ‘worst for 60 years’

By Krishna Guha and Alan Beattie in Washington and Chris Giles in Davos

Published: January 28 2009 19:23 | Last updated: January 28 2009 20:48

The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday.

The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had “weakened further” since its last policy meeting in December.

The US central bank made no immediate move to purchase Treasury securities – disappointing some in the markets – and signalled that its preference is to expand targeted credit operations instead. The Fed said it would “assess whether expansions of or modifications to lending facilities would serve to further support credit markets”.

The new growth forecasts mark a huge revision – down by more than 1.5 percentage points – from the IMF’s previous forecast for the year in spite of the inclusion of the fiscal stimulus efforts by governments into its predictions for the first time. Advanced economies, the IMF predicted, would contract 2 per cent in 2009 with the UK hit hardest.

In Geneva, the International Labour Organization said the global recession would lead to a “dramatic increase” in unemployment this year, which would certainly lead to 18m-30m additional unemployed and more than 50m “if the situation continues to deteriorate”.

The forecasts helped frame a sombre and gloomy mood as executives and policymakers started the annual meeting of the World Economic Forum in Davos, with leaders stressing the sharp and synchronised nature of the downturn, expressing concern about global policy co-ordination, and some scepticism that fiscal interventions would ensure a recovery.

Barack Obama, US president, meanwhile hosted a meeting with corporate leaders to rally support for a fiscal stimulus – which may now exceed $825bn – amid resistance from Republicans opposed to massive government spending. Werner Wenning, chairman of Bayer, the German pharmaceuticals group, was among several saying he did not expect solutions to be found during the week-long event. The problem, said Stephen Roach, chairman of Morgan Stanley Asia, was that the US consumer was only in the first stages of a rebalancing that would take a number of years and reduce consumption and increase saving. In the meantime, China, the world’s workshop, would find it difficult to expand production and, “as the Chinese economy has hit a wall, so has the rest of Asia”.

*Article copyright belongs to The Financial Times Limited 2009

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