World recession fears mount

BRUSSELS – Fears grew yesterday that the financial crisis will mutate into a worldwide recession with leaders calling for new global action against a slowdown.

As EU leaders gathered for a summit devoted to the financial turmoil, a top US central bank official said the United States appeared to be already in recession. Janet Yellen, president of the San Francisco Federal Reserve, said “virtually every major sector of the economy has been hit by the financial shock.”She said recent data indicated there was “essentially no growth at all” in the world’s biggest economy and “growth in the fourth quarter appears to be weaker yet, with an outright contraction quite likely.”Japan’s Prime Minister Taro Aso has already said he has “huge fears” for the future of the second biggest economy and German Chancellor Angela Merkel said the third economic giant faces a major test of its strength.”We must prepare ourselves for a weakening of growth in Germany.But I’m convinced that the slowdown will not prove a long-lasting one,” Merkel said as she urged the German parliament to pass a 480-billion-euro (655-billion-dollar) bank rescue package.”Germany is strong.But Germany is going to go through a difficult period,” she warned.Merkel said the Group of Eight world industrial powers would hold a special summit on the crisis before the end of the year with leading developing nations also present.In Brussels, British Prime Minister Gordon Brown urged fellow EU leaders to unite against the underlying problems behind the financial crisis.The first phase of the crisis has been ended with the stabilisation of the financial system, Brown said.”I believe we must now move to stage two …to make sure that problems that develop in financial systems, problems we know originated in America, do not occur again.”- Nampa-AFPJanet Yellen, president of the San Francisco Federal Reserve, said “virtually every major sector of the economy has been hit by the financial shock.”She said recent data indicated there was “essentially no growth at all” in the world’s biggest economy and “growth in the fourth quarter appears to be weaker yet, with an outright contraction quite likely.”Japan’s Prime Minister Taro Aso has already said he has “huge fears” for the future of the second biggest economy and German Chancellor Angela Merkel said the third economic giant faces a major test of its strength.”We must prepare ourselves for a weakening of growth in Germany.But I’m convinced that the slowdown will not prove a long-lasting one,” Merkel said as she urged the German parliament to pass a 480-billion-euro (655-billion-dollar) bank rescue package.”Germany is strong.But Germany is going to go through a difficult period,” she warned.Merkel said the Group of Eight world industrial powers would hold a special summit on the crisis before the end of the year with leading developing nations also present.In Brussels, British Prime Minister Gordon Brown urged fellow EU leaders to unite against the underlying problems behind the financial crisis.The first phase of the crisis has been ended with the stabilisation of the financial system, Brown said.”I believe we must now move to stage two …to make sure that problems that develop in financial systems, problems we know originated in America, do not occur again.”- Nampa-AFP