Washington - The world's 20 leading economies are holding an
historic summit in Washington Saturday to hammer out plans for
launching a new global financial order amid signs of a sharp economic
deterioration and renewed share market turmoil.
Launching moves aimed at overhauling the international financial
system and endorsing measures to spur world economic growth form the
two strands of the Saturday summit of so-called Group of 20 (G20)
leaders which is being hosted by US President W Bush.
But while the meeting is expected to set in motion a potentially
lengthy process of economic diplomacy for reshaping financial market
supervision, a slew of data and bleak company reports have
underscored the growing sense of urgency facing the global economy.
'The crisis is far from over and just when we think we understand
it, another surprise pops up,' said Mark Cliffe, head of global
markets at ING Bank.
Underscoring the mounting pressure on government leaders, key
industries led by the car industry are queuing up seeking government
aid to help them limp through what is the worst financial crisis
since the Great Depression.
Figures released Friday showed US retail sales recording their
biggest fall on record in October, cascading down 2.8 per cent and
fuelling fears that the world's biggest economy could be on the brink
of a deep and protracted economic downturn.
The result was to trigger another wave of selling on Wall Street
with the New York Stock Exchange marking the end of another volatile
trading week by plunging by about 4 per cent.
This also helped to set the stage for another turbulent trading
week starting on Monday and acts as a reminder of the deep sense of
uncertainty gripping global markets.
The International Monetary Fund has forecast that most advanced
economies will slip into recession in 2009. Emerging countries like
China and India will carry the mantle of growth for the year.
Highlighting the plight of the US car industry, auto sales
plummeted by 15 per cent month on month in October, with the top US
carmaker General Motors Corp warning that it was fast running out
of money after posting a 2.5-billion third quarter-loss.
US carmakers are in talks about a possible 25-billion-dollar
government bail-out. The deal is being pushed by Democrats in
Congress, but many Republicans and analysts are skeptical of rescuing
the industry for what is perceived as its own failure to modernize.
German Chancellor Angela Merkel returns to Berlin this weekend to
hold a crisis meeting on Monday with the board of GM's German
offshoot Opel, which is also putting up its hand for state support to
help it face up to the crisis and to sharp contraction in auto sales.
Meanwhile, the US Treasury is weighing new measures to try to stem
surging house foreclosures, which helped to trigger the financial
firestorm that swept through global markets in recent months.
Struggling homeowners have been promised help in refinancing.
Analysts have also warned that the next round of US quarterly bank
results are likely to be very grim reading, as financial institutions
continue to report writedowns related to the near-collapse of the US
mortgage market.
The G20 leaders' officials have agreed to a communiqué setting out
a series of principles for reshaping the world financial architecture
and calling for finance ministers to meet to hammer out the details.
This would be before another summit to review the progress of the
proposals for overhauling the financial system at the end of March or
early April.
In the meantime, global economic indicators are tanking.
The release of the new US data came just 24 hours after figures
released in Brussels showed the 15-member eurozone had slumped into
recession with analysts predicting a further contraction in the
currency bloc's economy in the run-up to the end of the year.
This followed a dramatic 1.6-per-cent slide in industrial
production in the eurozone in September.
While the giant European electronics group Siemens AG reported a
net quarterly loss of 2.4 billion euros (3 billion dollars),
Finland-based Nokia Corp, the world's biggest mobile phone maker
revised down its business outlook.
At the same time, another batch of figures out of China pointed to
how the shock waves from the crisis that first took hold in advanced
economies is now rapidly spreading to the world's emerging economies.
The data from China showed the Asian powerhouse economy losing
momentum with urban fixed investment sinking and falling exports and
construction driving down economic growth. China unveiled a
588-billion-dollar stimulus package just days before the Washington
summit.
Poor nations have also struggled to get a hold of foreign
investment as all countries have been forced to keep their cash
reserves closely guarded.
Kumi Naidoo of the Global Call to Action Against Poverty warned
that developing countries expected 'the same urgency now that leaders
demonstrated when it came to rescuing the banks just weeks ago.'
USA
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