March 2009
31 March
The World Bank says the world economy will contract by 1.7% this year, the first decline since World War II. The bank says that the world's richest countries will contract by 3%, while world trade will fall by 6.8%. Developing countries will grow by 2.1%, half the forecast six months ago, and some areas will fall into recession.
One in 10 workers in advanced economies will be without a job next year, said Angel Gurría, the head of the Organisation for Economic Co-operation and Development(OECD).
30 March
Companies borrowed US$1,500bn in the bond markets during the first quarter of 2009, but global merger and acquisition (M&A;) activity slumped 36% year-on-year, reports the Financial Times. M&A; has collapsed in the UK to just US$14.6bn, excluding government activity, according to Dealogic - the lowest level since its records began in 1995.
The White House has pushed out the chairman of General Motors , Rick Wagoner, and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.
Germany makes €60m capital investment in Hypo Real Estate (HRE), subscribing to new shares that give it an 8.7% stake in the property lender.
The Spanish government and the Bank of Spain began the country’s first bank rescue in this financial crisis, providing up to €9bn in liquidity to Caja Castilla La Mancha , a savings and loans institution, and replacing its directors with central bank nominees.
The Nationwide is to buy the Dunfermline Building Society's branches, good loans and deposits. The mutual was put up for sale after incurring losses of £26m. The Treasury will take £1bn of commercial property lending and acquired mortgage debt.
27 March
The US economy shrank in the fourth quarter at its fastest rate since 1982, showed revised official figures, as corporate profits fell at the sharpest pace in 55 years and jobless claims continued to climb. Updated commerce department data showed US gross domestic product contracting at an annualised rate of 6.3%.
The UK economy shrank even more than expected in the last three months of 2008, official figures show. The Office for National Statistics said the economy shrank by 1.6% compared to the third quarter, the most since 1980 and more than an earlier 1.5% estimate.
26 March
Romania became the latest eastern European country to seek external financial support, with the announcement of a €20bn International Monetary Fund (IMF)-led financing package to help steer the country through the economic crisis. In return for the funds the country must bring its budget deficit below 3% of gross domestic product by 2011. The IMF will lend the country €12.95bn with further support coming in the form of €5bn from the European Union, €1bn from the World Bank, and up to €1bn from multilateral institutions including the European Bank for Reconstruction and Development (EBRD).
Mitsubishi UFJ Financial Group is set to merge its securities subsidiary with Morgan Stanley’s Japanese securities operations, to create one of the top three brokerages in Japan. The Japanese bank and Morgan Stanley have been in talks since MUFG invested US$9bn last year into the US broker, for a 21% stake.
Banca Popolare di Milano (BPM) became the fourth Italian bank to announce that it would seek state-backed funding from Italy’s €12bn bank aid scheme. BPM said that it would tap the government scheme for €500m, a move that should give one of Italy’s largest regional banks a core tier one capital ratio of about 8%.
The Irish Republic's economy has suffered its largest contraction in recent decades. The economy shrank by 7.5% in the last three months of 2008 compared with the same period a year earlier, the official statistics office said. The construction industry, which has faced a housing market slump, suffered a 24% fall in output, the biggest fall on record. In the whole of 2008 the economy shrank by 2.3%, the first decline since 1983.
24 March
A key measure of UK inflation has fallen to zero for the first time in 49 years, official figures show. The Retail Prices Index (RPI), which includes housing costs, fell to 0% in February on an annual basis from 0.1% in January.
Bahrain-based Gulf International Bank (GIB) has sold $4.8bn of toxic assets to its shareholders, six Arab Gulf governments. GIB, an investment bank owned jointly by the six hydrocarbon-rich members of the Gulf Co-operation Council, has reported two years of losses totalling US$1.1bn.
Nine of the 10 executives who received top bonuses from US insurance giant AIG have agreed to return them, New York's attorney general said.
23 March
The US has announced details of a plan to buy up to US$1 trillion worth of toxic assets to help repair banks' balance sheets. The Public-Private Investment Programme will purchase the troubled mortgages and securities that have been at the root of the credit crisis. The Treasury has committed US$75bn to US$100bn to the programme and said the private sector would also contribute.
Eurozone industrial output plunged by 3.5% in January compared with the previous month, the biggest decline since records began in 1990.
The world economy is set to shrink by between 0.5% and 1.0% in 2009, the first global contraction in 60 years. In its gloomiest forecast yet, the International Monetary Fund (IMF) says that developed countries will suffer a ‘deep recession’.
_20 March _
The US Treasury’s auto taskforce laid out US$5bn in federal financing to suppliers in a deal that protects the core of the industry but could spell the end for some weak companies. The loan guarantee package is much smaller than suppliers had requested but was broadly welcomed by the industry and its investors, with shares in large suppliers rising sharply.
ThyssenKrupp is to be the first big German industrial company to slash thousands of permanent jobs because of the global recession, according to the Financial Times , as the country’s largest steelmaker struggles with a sharp downturn in demand. The conglomerate plans to cut more than 3,000 jobs, or 1.5% of its total workforce, in its steel and automotive production units and at its shipyards.
FedEx announced its second US$1bn cost-cutting plan in two years after its quarterly profits plunged 75%. The package delivery company said the worsening global economy was forcing it to cut more jobs and pay, and reduce working hours as profits in the three months to the end of February plunged to US$97m or 31 cents per share, from US$393m or US$1.26 per share in the same period a year earlier.
Britain’s International Motor Show has been cancelled for 2010 because of the uncertainty gripping the global car industry.
India is on course for a deflationary dip after data showed the country’s wholesale price index rose by only 0.44% earlier this month in spite of government efforts to stimulate the economy.
19 March
The US Federal Reserve announced plans to buy US$300bn of US government debt, triggering a plunge in bond yields and the dollar. The US central bank also said it was more than doubling its purchases of securities issued by Fannie Mae and Freddie Mac to US$1,450bn. It said it now expected to keep interest rates near zero for an ‘extended period’ of time.
The Financial Services Authority announced a sweeping overhaul of the UK’s financial regulatory regime, marking a break with its previous ‘light-touch’ approach and attempting to set a new global standard for the post-crisis world. Chairman Lord Turner set out plans to curb banks’ ability to take excessive risks by forcing them to hold more capital and increase their holdings of liquid assets and cash.
The Bank of Japan is to increase its purchases of Japanese government bonds by nearly a third. The bank said its decision to raise buying of JGBs from Y1,400bn a month to Y1,800bn was intended to ensure there was enough liquidity in the financial system to ensure its stability.
UniCredit , one of Italy’s top two banks, is to seek up to €4bn in state aid. The bank, which has expanded into central and eastern Europe and as far as Kazakhstan in the past decade, said it would ask the Italian and Austrian governments for the cash.
18 March
The Bank of Japan (BoJ) has unveiled a draft plan to provide up to Y1,000bn (US$10bn) in subordinated loans to large commercial banks. The BoJ move follows the Bank of England’s decision to buy UK government debt and the Swiss National Bank’s announcement of its plan to intervene in currency markets to drive down the Swiss franc.
UK unemployment has risen above two million for the first time since 1997, official figures have shown.
The World Bank has cut its prediction for China's economic growth in 2009 to 6.5% from 7.5%, saying it could not "escape the impact of global weakness".
17 March
Nokia , the world's largest mobile phone manufacturer, announces plans to shed 1,700 jobs worldwide as part of a cost-cutting drive.
16 March
Serbia has begun talks with the International Monetary Fund (IMF) to agree an emergency loan worth up to €2bn euros.
One in every 56 UK business will fail in 2009, according to a report by accountants BDO Story Hayward. The report estimates that the number of business failures will increase by 59% to 36,000. This compares with 22,600, or one in 87, that failed in 2008.
13 March
On US television programme The Daily Show , host Jon Stewart lambasts CNBC's Jim Cramer and the network itself for not alerting investors and viewers to the financial crisis. "You knew what the banks were doing, and yet were touting it for months and months," Stewart said. "The entire network was. And so now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst."
12 March
BMW's net profits tumbled nearly 90% to €330m last year, as the global economy weakened and reduced demand for cars.
11 March
Malaysia unveiled a large M$60bn (US$16.2bn) stimulus package, amounting to 9% of GDP, to prevent the export-dependent economy from sinking into a deep recession over the next two years. The package will include guaranteed funds for businesses, equity investments to boost the stock market and tax breaks in addition to increased state spending on infrastructure projects.
Chinese exports plunged 25.7% in February compared with a year ago, as the global economic crisis began to take its full toll on the country’s export sector. China’s exports have decreased for four months in a row.
Iceland nationalised Straumur-Burdaras , the last of the four biggest banks in the country to remain independent.
10 March
Prices paid by Chinese consumers fell for the first time in more than six years last month, prompting warnings from economists that the government will need to act quickly if the country is to avoid a bout of deflation.
Japan’s stock market tumbled to a 26-year low as official figures showing a record current account deficit stoked fears of a deepening recession in the world’s second-biggest economy.
9 March
Japan suffered its largest current account deficit ever in January, raising concerns that it was now in a depression. Japan’s current account fell into deficit for the first time since 1996 and at Y172.8bn (US$1.75bn) was much larger than the Y15.3bn shortfall forecast by economists.
6 March
The Bank of England (BofE) has created £75bn of new money to pump into the economy over the next three months. The BofE conceded that it had run out of options on interest rates after cutting rates as close to zero as possible and needed to take additional unorthodox measures to prevent a slide into deflation.
UK set for 70% economic stake in Lloyds group. Chancellor Alistair Darling has agreed an outline deal that would see the government insure toxic assets of £258bn.
Stock markets in the US and Europe tumbled after Chinese authorities failed to deliver a stimulus package and European central banks slashed interest rates in response to a worsening recession. The S &P; 500 dropped 4% to its lowest level since September 1996. Germany’s Dax lost 5%, France’s Cac 40 fell 4% and the UK’s FTSE 100 dropped 3%. Asian markets followed suit: Tokyo’s Nikkei average slid 3.1% and the MSCI index of Asia-Pacific stocks outside Japan was down 0.9%. Australia’s share market fell 1.8%, while South Korea dropped 1.2%. Japan’s Topix dropped to fresh 25-year low, following a 12-year low on Wall Street with growing concerns about the banking sector and the deteriorating health of General Motors.
4 March
The Australian economy is expected to enter recession after contracting for the first time in eight years. Gross domestic product dropped 0.5% in the December quarter from the previous quarter. Year on year growth rose by 0.3%.
The World Bank approved its largest ever loan to a country not classified as being in crisis when it signed a ‘unique’ US$2bn contingency facility to Indonesia to support government spending and external fundraising.
_3 March _
American International Group (AIG) revealed a US$61.7bn quarterly loss - the largest in US corporate history - and pointed to the next trouble spot for the financial sector by reporting large write-downs in commercial real estate.
Nationalised bank Northern Rock has confirmed that it made a loss of £1.4bn in 2008 following large write-offs on its mortgage loans.
World stock markets plunged this week. The UK's FTSE 100 fell 1.5%, while Germany's Dax and France's Cac 40 were virtually unchanged. Earlier, Japanese stocks traded close to 26-year lows. The Nikkei 225 fell sharply before recovering to 7229.7, down 0.69%. Hong Kong's Hang Seng fell 1.9%, while India's main Mumbai index ended down 2.3%. The US Dow Jones share index fell below 7,000 points for the first time since 1997.
Toyota , the world's biggest carmaker, has asked for US$2bn in state aid to help its car financing unit.
Nortel Networks , the Canadian telecommunications equipment maker operating under Chapter 11 bankruptcy protection, more than doubled its losses to US$2.14bn, mainly reflecting writedowns and a 15% decline in revenues that fell to US$2.72bn from US$3.2bn as customers cut back their spending. For the full year Nortel lost US$5.8bn, compared with a US$957m loss in 2007.