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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.

南宁桑拿

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.

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