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
World
G7 Finance Ministers endorse fiscal stimulus policy [31]
The United States
$1.2 trillion 2009 budget deficit - forecast by the Congressional Budget Office [32].
President-elect Obama proposes major fiscal stimulus - in his speech of 8 January [33].
(Government spending expected to rise to 23% of GDP [34])
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) [35] [36]
Eurozone
Discount rate cut from 2.4% to 2% [37]
United Kingdom
Discount rate cut - from 2% to 1.0% [38].
IMF endorses 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 "[39].
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 [40]. 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 [41] 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 [42] 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 [43] 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 [44] 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.