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Job cuts darken outlook for world economy

Posted by Manish Agrawal on Tuesday, 9 December, 2008

TOKYO: Another wave of job cuts darkened the outlook for the global economyTuesday as Sony announced 8,000 layoffs, while Japan revealed it was even deeper in recession than previously feared. 
Sony, seen as a bellwether of corporate Japan, said it would cut investment in its electronics business by 30 percent, axe 10 percent of its manufacturing sites and exit unprofitable businesses to cope with the economic downturn. 

The announcement came just hours after Tokyo said its economy shrank 0.5 percent in the three months to September — 1.8 percent on an annualised basis — even worse than initially estimated. 

“The data suggests that the economy is contracting faster than previously thought, and the depth of the recession will be more severe,” said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong. 

Asian stock markets were mixed after strong gains overnight on Wall Street where hopes mounted that economic stimulus measures will ease the US recession. 

Tokyo ended 0.8 percent higher but Hong Kong fell 2.05 percent, Sydney 0.8 percent and Shanghai 2.54 percent. 

Europe’s main stock markets opened slightly lower Tuesday, with London slipping 0.56 percent and Paris and Frankfurt both down 0.90 percent. Global shares had surged Monday after US president-elect Barack Obama vowed to make the largest investment in infrastructure since the 1950s to revitalise the slumping economy. The Dow Jones Industrial Average leapt 3.46 percent. 

“Gains reflected optimism that massive infrastructure spending planned by the Obama administration will end recession in the world’s biggest economy,” said Dariusz Kowalczyk, chief strategist at CFC Seymour in Hong Kong. 

Optimism was tempered by news that Japan slipped even deeper into recession in the third quarter than previously thought, underscoring the challenging outlook for the global economy. 

“The data highlights the tough spot in which the Japanese economy is finding itself,” said Kowalczyk. 

More US job cuts and a bankruptcy filing by one of America’s biggest newspaper publishers also injected a dose of caution into markets. 

Dow Chemical announced it would cut about 5,000 full-time jobs, while industrial conglomerate 3M said it was laying off nearly 1,800 people. 

US media conglomerate Tribune Co., the owner of The Los Angeles Times and The Chicago Tribune, said it filed for bankruptcy protection in the face of a sharp drop in revenue and a heavy debt load. 

At the same time, expectations mounted that lawmakers may throw crisis-hit American automakers a financial lifeline to avert an industry collapse. 

After US stock markets closed, Democrats in Congress announced Monday that they will introduce a bill making available as much as 15 billion dollars in immediate aid for the troubled US automobile industry.

Source : Economictimes.com

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