Recession of 2009/Addendum

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This addendum is a continuation of the article Recession of 2009.


National growth rates in OECD countries

GDP at constant market prices
% change on previous period

2006 2007 2008 Q1 07 Q2 07 Q3 07 Q4 04 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09
United States 2.8 2.0 1.1 0.0 1.2 1.6 0.0 0.2 0.7 -0.1 -1.6
Japan 2.0 2.4 -0.6 1.0 -0.3 0.4 1.0 0.3 -1.2 -0.4 -3.2
Canada 3.1 2.7 0.5 1.0 1.0 0.6 0.2 -0.2 0.1 0.2 0.8
United Kingdom 2.8 3.0 0.7 0.8 0.8 0.6 0.9 0.3 0.0 -0.7 -1.6 -1.9
Germany 3.0 2.5 1.3 0.4 0.4 0.6 0.3 1.5 -0.5 -0.5 -2.1
France 2.2 2.2 0.8 0.6 0.5 0.7 0.4 0.4 -0.3 0.1 -1.1
Italy 2.0 1.6 -1.0 0.2 0.1 0.2 -0.3 0.3 -0.6 -0.7 -1.9

Source: OECD, Main Economic Indicators and national statistics.

Recent economic developments

2009, 1st quarter

World

World trade falls - by 9% in 2008 according to the World Bank [1].
Protection grows World Bank reports 47 trade restrictions by 17 G20 countries [2]
Developing countries lose exports [3].
IMF lending resources to increase - US proposes tripling them [4]
G20 Finance Ministers pledge further action [5]

The United States

Rising unemployment - 7.6% in January, 8.1% February.
Record budget deficit - $1.2 trillion 2009 deficit forecast by the Congressional Budget Office [6]. (Government spending expected to rise to 23% of GDP [7])
Major fiscal stimulus - proposed by President-elect Obama in his speech of 8 January [8][9]
Congress approves stimulus package - American Recovery and Reinvestment Act(H.R. 1) - a $839 billion stimulus package [10]
Financial Stability Plan - Government launches a plan intended to restore confidence in the financial system (including mandatory stress tests for major banks) and to provide financial assistance households and businesses[11]
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) [12] [13]
Money supply increase Federal Reserve to increase the size of its balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. [14]
Washington's digression Outrage over AIG bonuses threatens to derail Obama's rescue plans [15]
Housing market bottoms out?. House sales rise by about 5% in February.
Public Private Partnership Investment Program announced [16] to purchase $1 trillion worth of toxic assets from banks.


Europe excluding UK

Industrial production falls - Eurozone index drops by 3.5% in January.
ECB Discount rate cut from 2.4% to 2% [17]
French industrial production plunges at an annual rate of 13% in January.
German output projected to fall by 2.5 percent in 2009[18].
Eastern Europe's economic crisis [19]
IMF's Hungary programme[20]

United Kingdom

Fiscal stimulus:a stimulus package was announced in the November Pre-Budget Report, with the main elements being a temporary 2.5 percentage point cut in the standard value-added tax rate and a bringing forward of £3 billion of capital investment. The discretionary fiscal easing (1.4% of GDP in 2009) was accompanied by plans for consolidation beginning in 2010/11. The automatic stabilisers and , are more significant factors behind the increase in the deficit, which is projected to rise to over 9% of GDP this year and even higher in 2010.[21]
Quantitative easing authorised[22]
Asset protection scheme[23]
Discount rate cut - from 2% to 1.0% [24].
IMF endorses UK policy IMF Deputy Managing Director says "There is no unique weakness in the UK economy, and we believe the measures taken ...will strengthen the economy over the medium term "[25].

Asia

China's falling growth rate [26]
Japan's exports halved - exports in January 2009 were 56% less than in January 2008 [27].

2009, 2nd quarter

World

United States

Europe except UK

IRELAND

Ireland’s economy is expected to contract by 7.75 per cent in 2009 as a combination of deteriorating domestic and external conditions weigh upon activity. In the recent supplementary budget, a number of revenue-raising measures and public expenditure cuts were implemented in order to limit the deterioration in the general government deficit to 10.75 per cent of GDP for 2009. In addition, to address the issue of asset quality in the banking system, the Government will establish on a statutory basis a National Asset Management Agency to which certain assets will be transferred from the banks. The purpose of this initiative will be to strengthen the banks’ balance sheets and achieve a sustained flow of credit to the economy.

United Kingdom

Consumer confidence falls to an all-time low [28].
More quantitative easing: Bank of England increases its Asset Purchase Programme by £50 Billion to £125 Billion [29]

Asia

Leading Indicators

per cent - long-term average = 100
Growth cycle phases of the CLI are defined as follows: expansion (increase above 100), downturn (decrease above 100), slowdown (decrease below100), recovery (increase below 100).

   Japan       Italy       France      Germany    United States United Kingdom   China     Russia  
October 2008 96.3 96.6 97.0 94.9 95.7 97.2 95.1 96.4
November 2008 94.7 96.3 96.6 93.1 94.0 96.6 93.3 93.2
December 2008 92.8 96.3 96.3 90.6 92.3 96.3 91.9 90.4
January 2009 91.2 96.3 96.3 90.6 91.0 96.0 90.8 87.9
February 2009 89.7 96.7 96.4 90.3 89.9 95.7 90.1 86.0


Source: OECD Composite leading indicators [30]

Forecasts

Annual percentage growth in Gross Domestic Product
(forecasts are shown in italics)
Date Source Country 2007 2008 2009 2010 2011
30 March 2009 World Bank [31] United States 2.0 1.1 -2.4 2.0
Japan 2.1 -0.7 -5.3 1.3
Euro area 2.6 0.7 -2.7 0.9
China 12 9.0 6.5 7.3
Developing [1] 6.1 5.8 2.2 4.8
World 3.7 3.1 -0.6 2.9
31 March 2009 OECD Economic Outlook [32] United States 1.1 -4.0 0
United Kingdom 0.7 -3.7 -0.2
France 0.7 -3.3 -0.1
Germany 1.0 -5.3 0.2
Japan -0.6 -6.6 -0.5
22 April 2009 International Monetary Fund [33] United States 2.0 1.1 -2.8 0
United Kingdom 3.0 0.7 -4.1 -0.4
France 2.1 0.7 -3.0 0.4
Germany 2.5 1.3 -5.6 -1.0
Japan 2.4 -0.6 -6.2 0.5
China 13 9 6.5 7.5
World 3.8 2.1 -2.5 1.0
9 May 2009 Economist Poll [34] United States -2.9 1.4
United Kingdom -3.7 0.3
France -2.9 0.3
Germany -5.2 0.3
Japan -6.4 0.6


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