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Washington - The World Bank offered a grim 2009 outlook on Tuesday of just 0.9 percent growth for the global economy, while a recession was declared in Canada and a rescue for US automakers hung in the balance.
In its "Global Economic Prospects" report, the World Bank sharply cut its growth forecast and predicted world trade volume would fall 2.1 percent as a worldwide credit crisis hits rich and poor nations alike.
Developing countries' economies would likely expand at reduced annual pace of 4.5 percent while wealthier, developed economies are expected to contract 0.1 percent, the multilateral development lender said.
"The global economy is at a crossroads, transitioning from a sustained period of very strong developing country-led growth to one of substantial uncertainty as a financial crisis rooted in high-income countries has shaken financial markets worldwide," said World Bank chief economists Justin Lin.
In Canada, the central bank lowered its key interest rate Tuesday by 0.75 point to 1.50 percent and said the Canadian economy had slid into recession amid the global financial crisis.
"The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated," the central bank said in a statement.
In Washington, the White House demanded that Detroit automakers prove their "long-term viability" in return for a $15bn rescue bailout but said a deal with Congress was in sight.
President George W. Bush's administration is making "good progress" in its talks with congressional leaders over legislation to shore up General Motors, Ford and Chrysler, White House spokesperson Dana Perino told reporters.
Outlook is bleak
In Geneva, the International Air Transport Association forecast that airlines would likely lose $2.5bn in 2009 due to the economic crisis.
In Britain meanwhile, data showed manufacturing output sank 1.4 percent in October from September, the eighth monthly drop in a row, and was down 4.9 percent on a 12-month basis, the Office for National Statistics said.
The monthly fall was the largest decline since March 2005 and means that the country has now faced the longest consecutive contraction in manufacturing output since 1980.
In Japan, Sony said it would cut investment in its electronics business by 30 percent, cut 10 percent of its manufacturing sites and exit unprofitable businesses to cope with the downturn.
The announcement came just hours after Tokyo said the Japanese economy shrank 0.5 percent in the third quarter - 1.8 percent on an annualized basis - even worse than initially estimated.
- AFP