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Russia, China warn of dire economic straits in 2009
2008-12-24
MOSCOW (AFP) - Russia and China issued stark warnings on Wednesday about the impact of the crisis on their recently booming economies in 2009, with Moscow saying the downturn could spark unrest in the streets. Japan also approved a record-high budget aimed at avoiding the worst effects of the crisis and Germany prepared to pump billions of euros into the economy in a new rescue plan in a holiday season marred by a slew of economic bad news. "We need to take unprecedented measures when in an extraordinary economic situation," Japanese Prime Minister Taro Aso said at a news conference after his cabinet backed the 980-billion-dollar (700-billion-euro) budget. "Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said. In Moscow, a top Kremlin economic aide said there would be a budget deficit in 2009 for the first time for a decade as Russia -- the world's second-biggest producer of crude oil after Saudi Arabia -- reels from the global crisis. "The deficit is caused by the fall in oil prices, above all," Arkady Dvorkovich was quoted as saying in reference to the plunge in prices from record highs of above 147 dollars per barrel in July to under 40 dollars now. With oil prices heading towards the year end at their lowest level for four years, the price of Brent North Sea crude for February sank to 38.63 dollars per barrel on London's InterContinental Exchange (ICE) amid weakening demand. Commenting on the worsening situation, Deputy Interior Minister Mikhail Sukhodolsky, warned that unpaid wages, the threat of layoffs and unpopular government anti-crisis measures "may aggravate the protest mood." China's top economic planner also warned of "great challenges" ahead. The head of the National Development and Reform Commission, Zhang Ping, said "grave risks" lay ahead for goals of fast growth and high employment if the government did not manage to stimulate demand and maintain export growth. Economists have warned that the global downturn could mean that China will end 2008 with its weakest economic growth for nearly two decades. China has not posted annual growth of less than 7.6 percent since 1991. In Asian stock markets, Tokyo tumbled 2.37 percent and Chinese shares closed down 1.76 percent. European stocks were also down, with the FTSE 100 in London down 1.03 percent and CAC 40 in Paris down 0.41 percent. Newspaper reports in crisis-hit Germany, Europe's biggest economy, said the government was planning a second stimulus programme for 2009 that could see the government pump 40 billion euros (56 billion dollars) into the economy. The dollar was on the back foot in currency exchanges, falling to 90.37 yen in Tokyo from 90.96 in New York late Tuesday and dropping against the euro in morning trading in London to 1.3991 dollars from 1.3924 dollars on Tuesday. In a sign of the times in Germany, poodles, terriers and sheepdogs queued up for rations in the country's first soup kitchen for pets, housed in a disused school in the former communist east Berlin. The soup kitchen was opened in October and offers free food for pets belonging to pensioners and the growing ranks of Berlin's unemployed. Julia Raasch, who heads the soup kitchen, said: "We've already signed up nearly 400 people. And our stocks are dwindling fast."
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