September, 2019

OECD economies to shrink by 4.3%

The OECD group of leading global economies and the World Bank issued bleak forecasts for world economic momentum ahead of the high-stakes summit of G20 leaders in London.


OECD economies to shrink by 4.3%

The World Bank forecast “unprecedented” declines in global economic output and trade volumes this year for the first time since World War II, warning that growth would also slow sharply in the vulnerable developing world.

The World Bank said the global economy would shrink by 1.7 per cent in 2009, while the 30-member OECD (Organisation for Economic Co-operation and Development) said its economies would see a contraction of 4.3 per cent this year.

\’World in deepest recession\’

“The world economy is in the midst of its deepest and most synchronised recession in our lifetimes, caused by a global financial crisis and deepened by a collapse in world trade,” OECD chief economist Klaus Schmidt-Hebbel said.

Growth in 2009 was forecast to contract 4.0 per cent in the United States, 4.1 per cent in the eurozone and 6.6 per cent in Japan, the OECD report said.

The OECD also called on governments to step up stimulus spending to spark a recovery in 2010 likely to be “muted” at best, echoing US appeals that have so far been brushed aside from leading EU states including France and Germany.

Bleak outlook for Asia

The Asian Development Bank meanwhile said growth in Asia\’s developing economies would fall to 3.4 per cent in 2009, adding that the short-term outlook was “bleak” and that more than 60 million people would remain mired in poverty.

The report said China, the major driver of the region\’s growth in the past decade, would expand by 7.0 per cent this year, much below Beijing\’s target of 8.0 per cent seen as the minimum required to prevent mass unemployment.

World Bank pushes $50b fund

World Bank president Robert Zoellick was quick to use the latest economic forecasts as fresh ammunition to push for a new $US50 billion ($A73.63 billion) trade liquidity fund to benefit the world\’s poorest nations.

“G20 backing will help us gain more momentum,” he said in a speech ahead of a meeting in London on Thursday of leaders of the Group of 20 industrialised and developing economies aimed at forging a common front against the crisis.

Leaders gather for G20

Ahead of the G20 meeting, British Prime Minister Gordon Brown said world leaders must restore a sense of morality to global finances, while warning demonstrators who have promised to cause severe disruptions in central London.

As leaders set out their positions for the talks, Japan\’s Prime Minister Taro Aso said his country would “play a leadership role” at the summit “so that the world economy can gain smoother access to necessary capital”.

And French President Nicolas Sarkozy raised the stakes, warning that France would not accept any consensus that ignored his demand for tighter financial regulation while playing down US calls for more stimulus spending.

US auto industry shake up

A massive shake-up meanwhile continued to roil the US auto industry, a day after President Barack Obama warned auto giants General Motors and Chrysler would have to get their act together before getting any fresh state aid.

The head of Italian auto giant Fiat, Sergio Marchionne, left for Detroit on Tuesday for meetings with Chrysler as the White House gave the ailing US company 30 days to sign a partnership with Fiat or face possible collapse.

Underscoring the severity of the crisis, unemployment in Germany, Europe\’s biggest company, edged higher and in Japan, the world\’s second largest economy after the United States, the jobless rate hit a three-year high of 4.4 per cent.

In France, anger over job cuts sparked another “boss-napping” incident when workers detained four managers from US firm Caterpillar at a plant in the eastern city of Grenoble in protest at plans to slash hundreds of jobs.

It was the third time this month that executives had been held by French workers after a factory run by US firm 3M in central France held a manager for more than 24 hours and the boss of Sony France was detained for a night.

Medibank to shift 140 staff to part-time

Medibank Private has confirmed about 140 full-time staff members will be shifted to part-time work, as the government-owned health insurer merges with an occupational health services firm.


But a Medibank spokesman says no jobs will be lost as part of a restructure.

“There’s certainly no jobs going today,” spokesman James Connors told AAP.

The Community and Pubic Sector Union said 250 full-time staff had been asked to move to part-time work but Mr Connors said the number was likely to be lower.

“We’re still in consultation and we don’t have a final number,” he said.

“One figure we had was 140. It could be higher but it won’t be anything like 250.”

Mr Connors said Medibank Private was moving full-time staff on to part-time work so more employees were rostered on at retail centres during peak customer periods.

“We’re trying to make our staff more flexible and we want more staff on when members use the centres,” he said.

“We’re not firing people. At the end of this, we’ll be hiring people.”

The union said Medibank Private had asked 250 full-time employees to either accept part-time work or be made redundant.

The ultimatum for full-time workers expired on Wednesday.

“These are radical plans and far more extreme than Australian companies in legitimate financial trouble,” union spokeswoman Nadine Flood said.

Medibank Private, which was established by the Fraser government in 1976, formally merged with Health Services Australia Limited on Wednesday.

The occupational and travel health services firm was established in 1997.

“Rather than just being a private health insurer we’ll be an integrated health service company,” Mr Connors said.

“From today, we’re going to have a private health division and a health services division.”

Medibank Private bought the Wollongong-based health insurer AHM in 2008 for $367 million.

Don’t panic, it’s just a missile

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Document\”> An influential think-tank has urged the world not to over-react to North Korea\’s upcoming rocket launch, saying an “overblown” response could wreck nuclear disarmament talks and even risk a war.

The International Crisis Group (ICG), in a report seen Wednesday, said even a successful test-launch would only slightly heighten security risks.

An “overblown response would likely jeopardise” the six-party nuclear talks and strengthen hardliners in Pyongyang, it said.

Any use of missile defences could in the worst case “risk a war with potentially devastating damage to South Korea, Japan and the world economy,” the Brussels-based conflict resolution group said.

The communist North has announced it will launch a communications satellite some time in early April.

The United States, South Korea and Japan say this is a pretext to test a long-range ballistic missile in violation of UN resolutions, and promise to report the launch to the Security Council.

But permanent council members China and Russia are unlikely to support any strong measures, the report noted.

Japan has deployed anti-missile systems to try to bring down the rocket should it start falling toward Japanese territory, while the US says it does intend to try to intercept it.

The North says that even a discussion of the launch in the Security Council would wreck the six-party talks, while any interception would mean war.

The talks group the two Koreas, the United States, China, Russia and Japan.

“The prospective launch fits a pattern of North Korean attention-seeking when faced with stresses at home, political changes abroad or failure to get what it wants in negotiations,” the ICG report said.

It urged the other five members of the six-party talks to agree to “a moderate set of measures that maintains their unity in the face of North Korea\’s provocation.”

The report said the Taepodong-2 missile does not pose a significantly increased risk to Japan, since the North\’s tested and apparently reliable Rodong missile can already carry a nuclear warhead as far as Tokyo.

The report quoted intelligence sources as saying such warheads are believed to have been assembled for the Rodong.

“The Taepodong-2 could possibly reach Alaska but the likelihood of such a strike is negligible, since the North knows it would be devastated in any response,” it said.

“The launch of a Taepodong-2 also takes weeks to prepare; in a time of considerable tensions the missile could be destroyed on the (launch) pad.”

The six-party talks are stalled over differences about how the North\’s declared nuclear activities should be verified.

“Resumption of the talks is still a possibility, but they could be permanently derailed if the missile is shot down,” the ICG said.

New Israeli PM \’doesn\’t want peace\’

Palestinian president Mahmud Abbas has said that Israel\’s new Prime Minister Benjamin Netanyahu “does not believe in peace” and urged world leaders to pile pressure on him.


“Benjamin Netanyahu never believed in a two-state solution or accepted signed agreements and does not want to stop settlement activity. This is obvious,” Abbas told the official Palestinian news agency.

“We have to tell the world that this man does not believe in peace, so how should we deal with him? Let\’s put the ball in the world\’s court so that it puts pressure on him and assumes its responsibilities.”

Abbas\’s remarks came hours after Netanyahu was sworn in as prime minister at the helm of a right-wing government that has said it will hold talks with the Palestinians but is not committed to the two-state solution.

“We will carry out peace negotiations with the Palestinian Authority with a view to reaching a final accord,” Netanyahu said Tuesday.

“Under the final accord, the Palestinians will have all the rights to govern themselves except those that can put in danger the security and existence of the state of Israel,” Netanyahu said.

The Palestinian Authority said Netanyahu\’s statements “mark a start that is not encouraging” and urged US President Barack Obama – who has vowed to actively pursue peace talks – to put pressure on Israel.

“The American administration should pressure the Netanyahu government to stick to the fundamentals of the peace process, in other words land for peace.

“This means the restitution of all the Palestinian territories occupied in 1967, including east Jerusalem,” Abbas\’s spokesman said Tuesday.

Israel and the Palestinians formally launched US-backed peace talks in November 2007 but the negotiations made little visible progress before grinding to a halt during Israel\’s offensive in the Gaza Strip at the turn of the year.

The European Union last week warned of “consequences” if the new government does not commit itself to the principle of the two-state solution, saying relations would become “very difficult.”

And US President Barack Obama acknowledged that peace efforts under a Netanyahu cabinet would not be any easier but were just as necessary.

Israel committed itself to a two-state solution in the 2003 roadmap agreement, which calls on Israel to halt settlement activity and the Palestinians to halt attacks on the Jewish state.

Afghan bomber kills six

At least one suicide bomb has exploded at provincial council offices in Afghanistan\’s city of Kandahar in an attack that killed six people, witnesses and officials said.


Three gunmen in Afghan military uniform, apparently attackers, also stormed the building straight after the blast, shooting as they went, witnesses told AFP although this was not confirmed by authorities.

At least one of the assailants blew himself up in a second explosion, the witnesses said. It was not clear if others remained in the building.

Officials could not immediately confirm two blasts.

“There has been a suicide blast in front of the provincial council office in Kandahar,” interior ministry spokesman Zemarai Bashary told AFP.

“The area has been cordoned off by police. At this stage we don\’t know if there are any casualties or how many. We also don\’t know if there were one or two suicide blasts,” he said.

At least six people were killed and 16 wounded, national health ministry spokesman Abdullah Fahim told AFP.

Agha Lalai, a provincial council member who was attending a seminar inside the building at the time, said there was “a big explosion” which blew open the gate of the compound.

“Then some people — I don\’t know if they were the terrorists – entered the building and started firing in the hall.

“Our bodyguards fired back. Another explosion occurred. It was like one of them blew himself up as our bodyguards fired at them.”

Lalai said he saw several wounded people, including one provincial council member, but he could not say how many.

A driver who was also inside the building at the time of the attack said a four-by-four vehicle exploded in front of the council offices.

“The three men in ANA (Afghan National Army) uniform entered the building,” Sayed Ahmad told AFP from the city\’s main hospital. “They kept firing in every direction,” he said.

“Six of my friends were wounded and I brought them here to hospital,” he said.

There was no immediate claim of responsibility for the attack but it is likely to have been carried out by extremists behind a wave of violence in Afghanistan and neighbouring Pakistan.

Kandahar province is the birthplace of the Taliban movement, which leads the insurgency against the Western-backed government and foreign troops in Afghanistan, with support from militant sanctuaries across the border.

The Taliban swept into government in 1996 and were removed in the 2001 US-led invasion.

Last year saw the most attacks since then and last week the United States unveiled a sweeping new strategy designed to defeat the extremists and stabilise the fragile country.