The World Bank has forecast the international economy is set to contract for the first time in 50 years and claimed the downturn has erased $US50 trillion in assets worldwide. President Robert Zoellick has said there must be urgent action to prevent an “economic catastrophe”.
“We need investments in safety nets, infrastructure and small and medium sized companies to create jobs and to avoid social and political unrest,” he said.
The dire warnings will almost certainly dominate conversation at next month’s G20 meetings, where world leaders hope to bring about cures for the economic crisis.
The more immediate threat to the Australian economy has been the decline in activity in Asian commodity markets, with Australia’s largest trading partner, Japan, flagging its first budget deficit in 13 years overnight.
A new report from the Centennial Group for the Asian Development Bank shows Asian losses make up 20% of all assets lost in the downturn.
The report also claims that the value of finance assets in emerging Asian markets has been cut by $9.6 trillion.
“This is by far the most serious crisis to hit the world economy since the Great Depression,” the bank’s president Haruhiko Kuroda said.
“No region or country is insulated, and I am afraid things may get worse before they get better.”
Meanwhile, the Australian sharemarket has opened lower today after negative leads from Wall Street. The Dow Jones Industrial Average fell 1.21% to 6547.05 to six-year-low after more bad news from major pharmaceutical groups. Oil prices jumped 3.4% to $US47 a barrel
But Australia’s benchmark S&P/ASX200 index has recovered and was up 1.5 points or 0.05% to 3156 at 12.20 AESDT. The dollar has slipped back to US63 cents.
Commonwealth Bank shares have jumped 2.5% to $27.30, while ANZ has also gained 0.5% to $12.59. NAB dropped 0.4% to $15.97, while BHP Billiton shares have dropped 0.7% to $28.93.
Mining giant Rio Tinto says it has reached an agreement that will see the group sell its Jacobs Ranch coal mine in the US for $US761 million in order to help reduce debt. The move follows sales of the company’s Ningxia smelter in China and Brazilian iron ore facilities.
Telstra, the nation’s largest telecommunications group, has said it will triple the current speed of its broadband networks in Melbourne as the first stage of a nationwide upgrade.
Chief executive Sol Trujillo says $300 million will be used to transform the network to deliver “next generation internet”.
“Using new technology already successfully deployed in several cable networks overseas, Telstra will immediately begin work to turbo-charge its five-city cable network,” the company said in a statement.
“This cable upgrade will position Telstra to deliver on its vision of a world-class fixed-line infrastructure that complements our world-leading Next-G mobile broadband network in delivering services that meet our customers’ needs.”