Recession of 2009/Addendum
Recent economic developments
2008 4th quarter
World
G20 leaders agree on need for fiscal stimulus [1]
The oil price falls. (December Brent North Sea crude $45/barrel, down fron July $147 peak)[2].
The United States
US output falls - real GDP fell (on 1st estimate) at an annualised rate of 3.8% in the 4th quarter of 2008 [3]
US consumer confidence falls to its lowest point since first measured in 1967[4].
US interest rate cut Federal Reserve Bank's benchmark rate cut to betweee 0 and 1/4% [5].
US national debt reaches 72.5% of GDP
Dollar interbank rate fall - 3-month LIBOR falls from 2.8% (September) to 1.58% (Dec 17)[6].
US unemployment rate the highest for 14 years - 6.7% in November 2008[7].
US consumer prices record falls - by 1% in October [8]and 1.7% in November [9]
US congress fails to agree on fiscal stimulus [10][11] [12]
US Federal Reserve Bank's $800 billion support package [13]
US Federal Reserve Bank buys mortgage-backed securities - Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [14].
US Federal Reserve Bank's quantitative easing - Open market purchases raise base money (the Bank's balance sheet total) from $0.9 trillion to $2.2 trillion [15]
US national debt reaches 72.5% 0f GDP[16]
Eurozone
European Fiscal Stimulus EC Commission plans 1.5% GDP fiscal stimulus [17].
Eurozone interest rate cut - by the European Central Bank by 1.5 p points to 2.5% [18].
Euro interbank rate cut - 3-month LIBOR falls from 4.4% (25 Sept) to 3.14% (Dec 17) [19]
The United Kingdom
UK output falls - by 0.5% between second and third quarters of 2008 [20] and by 1.5% between 3rd and 4th quarters [21].
Discount rate cut by an unprecedented 2.5 p pt to 2 per cent.
Interbank rate falls - from 6.3% (Sept 30) to 3.01% (Dec 17) [22].
UK Budget stimulus - discretionary public expenditure of 1.1% of GDP [23][24]
Opposition party opposes fiscal stimulus - David Cameron's speech of 8 December [25]
Investment banks cut lending - by over two-thirds between September and October [26]
UK national debt reaches 43.6% of GDP [27]
Other European countries
Crises in Iceland, Hungary and Ukraine - to be tackled by loans from the International Monetary Fund
Sweden cuts interest rates - by 1.75 pt to 2.0% [28].
Asia
Recession in Japan GDP expect to have fallen at an annualised rate of 12% in Q4 2008 [29]
Developing countries in recession GDP probably fell by an average annualised rate of around 15% in Hong Kong, Singapore, South Korea and Taiwan [30]
First quarter of 2009
The United States
$1.2 trillion 2009 budget deficit - forecast by the Congressional Budget Office [31].
President-elect Obama proposes major fiscal stimulus - in his speech of 8 January [32].
(Government spending expected to rise to 23% of GDP [33])
Fears of Trade War – America First Steel Act, Homeland Security Comm. approves bill requiring federal agencies to use U.S. steel for public works projects, (HR 5935) [34] [35]
Eurozone
Discount rate cut from 2.4% to 2% [36]
United Kingdom
Discount rate cut - from 2% to 1.5% [37].
Forecasts and outturns
- Annual percentage growth in Gross Domestic Product
- (forecasts are shown in italics)
Date Source Country 2007 2008 2009 2010 2011 06 November 2008 International Monetary Fund [38]. United States 2.0 1.4 -0.7 Europe 2.6 1.2 -0.5 Japan 2.1 0.5 -0.2 China 12 9.7 8.5 World 5.0 3.7 2.2 08 November 2008 Economist poll [39] United States 2.0 1.4 -0.1 United Kingdom 3.0 0.9 -1.0 France 2.2 0.9 0.0 Japan 2.1 0.5 -0.1 13 November 2008 OECD [40] United States 2.0 1.4 -0.9 1.6 Japan 2.1 0.5 -0.1 0.6 Europe 2.6 1.1 -0.5 1.2 22 December 2008 World Bank [41] United States 2.0 1.4 -0.5 2.0 Japan 2.1 0.5 -0.1 1.5 Euro area 2.6 1.1 -0.6 1.6 China 12 9.4 7.5 8.5 Developing [1] 6.1 5.0 2.9 4.7 World 3.7 2.5 0.9 3.0 28 January 2009 International Monetary Fund [42] United States 2.0 1.1 -1.6 1.6 United Kingdom 3.0 0.7 -2.8 0.2 France 2.2 0.8 -1.9 0.7 Japan 2.4 -0.3 -2.6 0.6 China 13 9 6.7 8 World 5.2 3.4 0.5 3.0
- ↑ Developing countries except China and India.