Thursday January 29, 02:26 PM
Jobs gloom mounts as US rescue plan passes first hurdle
BERLIN (AFP) - A surge in Germany's unemployment rate and more widespread Asian job cuts plunged the world economy deeper in the mire Thursday as Barack Obama's plan to cushion the impact on the US passed its first hurdle.
Official figures showed the rate in Germany jumped 387,000 over the last month to almost 3.5 million, well above forecasts for Europe's largest economy, which is due to hold national elections later this year.
There was also grim news on the jobs front in Asia's largest economy with Japan's Nippon Sheet Glass Company saying it will shed 5,800 jobs by 2010 and Toshiba (Berlin: TSE1.BE - news) announcing plans to cut 4,500 jobs this year after going into the red.
Toshiba chief executive Atsushi Nishida told reporters that the company aimed to cut 300 billion yen (3.3 billion dollars) in costs in the next financial year to weather the global crisis.
Other titans of Japanese industry were also showing the strain with Sony Corporation (Munich: SON1.MU - news) warning it remained on course for its biggest ever loss in the year to March following a fall in demand for televisions, cameras and games consoles.
Even Nintendo, which has enjoyed spectacular growth in earnings in recent years thanks to surging sales of the Wii and other game consoles, cut its annual net profit forecast by one-third to 230 billion yen.
The International Monetary Fund had forecast on Wednesday that the world economy would likely record the slowest pace of growth for the world since World War II in the coming year.
"Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economy," it said, in an update of November forecasts that shaved about 1.75 points off its prior global growth estimate.
A forecast in the IMF report the US economy was set to contract by 1.6 percent in 2009, underlining the severity of the crisis facing the country's new president as he sought to win the backing of lawmakers for a 819-billion-dollar economic package.
"We must move swiftly and boldly to put Americans back to work, and that is exactly what this plan begins to do," said Obama after the House of Representativs approved the measure by a vote margin of 244-188.
But despite clearing its first hurdle comfortably, Obama notably failed to win over any Republican members of Congress and even 11 representatives from his own Democratic party voting against.
Republicans, who lacked the votes to block the bill in the House but have significantly more clout in the Senate, promised not to be merely "the party of 'no'" and signaled they would keep fighting for tax cuts as the best remedy.
European governments have also rolled out a raft of stimulus pacakages but a new survey released Thursday showed that consumer and business confidence sank to a record low in January.
The European Commission's economic sentiment indicator for the 16 countries sharing the euro fell to 68.9 points in January from 70.4 points in December, hitting the lowest level since the survey began in January 1985.
French President Nicolas Sarkozy was meanwhile facing a first large-scale protest to his handling of the economy with strikes forcing many workers to stay at home for the day.
Sarkozy has announced a 26-billion-euro stimulus package for industry but has pledged to press ahead with unpopular reforms to trim the public sector workforce and liberalise the labour market.
The financial crisis has cast a long shadow over the annual gathering of political and business leaders in the Swiss resort of Davos where the head of the OPEC oil cartel said members need an oil price above 50 dollars a barrel to make exports worthwhile.
"We are not happy with 40 even 50 dollars a barrel," OPEC Secretary General Abdalla Salem El-Badri told a panel discussing energy security at the World Economic Forum.
Reflecting the crisis in the oil sector, Anglo-Dutch energy giant Royal Dutch Shell (LSE: RDSB.L - news) said Thursday it made a net loss of 2.81 billion dollars (2.15 billion euros) in the final quarter of 2008 as plunging prices slashed the value of inventories.
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