New recession warnings hit leading economies

PARIS: The OECD warned yesterday that the US faced more economic pain before any recovery late next year as data showed Japan and Britain slipping even deeper into recession than previously feared.

The Organisation for Economic Cooperation and Development, an influential government-funded economics institute based in Paris, was supportive of stimulus efforts for the US economy and praised cuts in interest rates.

But it said the world’s biggest economy “is nonetheless likely to get weaker before its gets better,” forecasting a contraction of 0.9 per cent next year.

In Japan, Sony, a bellwether of corporate Japan, said it would cut investment in its electronics business by 30 per cent, axe 10 per cent of its manufacturing sites and exit unprofitable businesses to cope with the downturn.

The announcement came just hours after Tokyo said its economy shrank 0.5 per cent in the three months to September — 1.8 per cent on an annualised basis — even worse than initially estimated.

“The data suggests that the economy is contracting faster than previously thought, and the depth of the recession will be more severe,” said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong.

In Britain, meanwhile, manufacturing output sank 1.4 per cent in October from September, the eighth monthly drop in a row, and was down 4.9 per cent on a 12-month basis, the Office for National Statistics (ONS) said in a statement.

The monthly fall was the largest decline since March 2005 and means that the country has now faced the longest consecutive contraction in manufacturing output since 1980. - AFP

NST