Major advanced economies slide further into recession

Special Report:Global Financial Crisis

A man walks past a shop advertising a sale in Tokyo Jan. 30, 2009. The world's second largest economy is in the midst of its first recession in seven years as the global economic slowdown sharply reduced demand overseas for cars, electronics and other key exports. (Xinhua/Reuters Photo)
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BEIJING, Feb. 17 (Xinhua) -- Japan's economy shrank
at its fastest pace in nearly 35 years in the fourth quarter of 2008, joining
other major advanced economies in sliding further into recession.

Japan, which is largely driven by exports, suffered a
loss of 12.7 percent in its gross domestic product (GDP) in the October-December
period last year, a government report said Monday, blaming the worsening
situation on plunging external demand, rapid deceleration of the world economy
and a stronger yen.

Earlier in October, Japanese Prime Minister Taro Aso
had unveiled a 27 trillion yen (275 billion U.S. dollars) stimulus package to
bolster the world's second largest economy.

In December, Japan's central bank cut its key
interest rate to 0.1 percent, lowering borrowing rates to nearly zero, and
adopted new measures to pour more money into the banking system to shake off a
widening credit crunch.

These moves in some way helped promote internal
demand, but were not enough to instantly pull the export-driven economy out of
recession as international demand for made-in-Japan continues to shrink amid the
spiraling global economic crisis.

However, Japan is only part of a gloomy global
picture. Recent data indicates that the major advanced economies of the world
are slipping further into recession despite governments' efforts to stimulate
growth.

In the United States, the economy plummeted at an
annualized rate of 3.8 percent in the fourth quarter of 2008, the worst since
1982, the U.S. Commerce Department said.

According to the country's Institute for Supply
Management, economic activity in the U.S. manufacturing sector failed to grow in
January for the 12th consecutive month.

Meanwhile, consumer spending, which accounts for
two-thirds of overall U.S. economic activity, recorded an unprecedented
six-monthly decline last December, indicating that the economy has yet to hit
bottom.

The government's newly passed 787 billion dollar
stimulus plan, which U.S. President Barack Obama described as a "major milestone
on our road to recovery," is yet to be tested for effectiveness, and
presidential aides have warned consumers not to expect instant miracles.

Further, the Wall Street Journal quoted economists as
forecasting that the United States will see an annualized GDP decline of 4.6
percent in the first three months of 2009 and a 1.5percent decline in the second
quarter.

Meanwhile in Europe, flash official figures released
last Friday suggest that GDP in both the European Union (EU) and the euro zone
contracted steeply in the fourth quarter of 2008, falling for the third quarter
in a row.

The 1.5 percent GDP decline in both the euro zone and
the EU from the previous quarter is even worse than the 1 percent contraction in
the U.S. economy during the same period.

The German economy, which is Europe's biggest, shrank
by 2.1 percent in the fourth quarter last year compared with the previous one,
representing the biggest decline since the country's reunification nearly two
decades ago.

Germany's reliance on exports of goods like cars and
factory equipment have made it particularly vulnerable to the global economic
turmoil and collapsing world trade.

In Britain, the central bank predicted last Wednesday
that the country's economy could shrink as much as 6 percent in 2009 compared
with the previous year, with rising unemployment, weak consumer spending and low
investment levels threatening to further dampen output.

The economies of France and Italy declined by 1.2
percent and 1.8 percent respectively versus the previous quarter, wiping out any
illusion that the euro zone is getting off lightly amid the worldwide meltdown.

Dominique Strauss-Kahn, head of the International
Monetary Fund, recently said that leading economies are already in depression,
adding that the worst was probably still to come, urging swifter and more
determined stimulus action from governments.

World Bank moves to widen access

BEIJING, Feb. 13 -- The World Bank's board of governors has approved a
proposal to create an additional seat for developing nations on its executive
board. This move, if sealed by the bank's 185 members, will help developing
countries to have a majority of seats on the board. It would also help increase
the voting power of this bloc to 44 percent.

"Expanding the developing world's voice
is central to delivering effective aid and promoting shared prosperity and
development within a 21st century economic reality," World Bank Group
President Robert Zoellick said in a statement.(Photo: China
Daily)
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Gallery

The measure comes as a response to the criticism that it (and other
international organizations such as the IMF) faced last year for its failure to
foresee the global financial crisis.

At the G20 Summit in Washington last November, some developing nations had
pressed for a revision in the representation mechanism in international
financial institutions. This, they said, would enable them to have a better say
in the workings of these multilateral bodies.

"Expanding the developing world's voice is central to delivering effective
aid and promoting shared prosperity and development within a 21st century
economic reality," World Bank Group President Robert Zoellick said in a
statement.

The bank agreed to add a chair for Sub-Saharan Africa in addition to its
existing 24 seats on the executive board. This was part of the bank's "first
phase of reforms to increase the influence of developing countries". It also
pledged to undertake a comprehensive work program to realign bank shareholdings
and move toward an equitable voting arrangement between the developed and
developing countries.

Although the latest move comes as an important step to help reform the
World Bank's governance structure, experts have warned that bolder reforms are
needed going forward.

"It is an irreversible trend for the developing world to push reforms on
the international financial institutions, and the change in the World Bank's
representation is but a minor step on the road to making it more
representative," Hua Ercheng, chief economist with the China Construction Bank,
said.

The current management mechanism in international financial institutions
was out-dated as it largely reflected the political and economic landscape of
the early years after World War II, Hua said, pointing out that it was
unreasonable to still stick to the old governance model.

(Source: China Daily)

World Bank approves governance reforms for Africa

NAIROBI, Feb. 12 (Xinhua) -- The World Bank has approved a first phase of
reforms to increase the influence of developing countries within the World Bank
Group, including adding a seat for Sub-Saharan Africa to allow developing
countries a majority of seats on the Executive Board, and expanding voting and
capital shares.

A statement from the bank's office in Nairobi said on Thursday that these
reforms were initially agreed at the World Bank Group's Annual Meetings in
October 2008, ahead of the Spring 2009 target.

"Expanding the developing world's voice is central to delivering effective
aid and promoting shared prosperity and development within a 21st Century
economic reality," said World Bank Group President Robert B. Zoellick.

"Adding another seat for Africa, reaching developing country majority on
the Board, expanding developing country shares and laying the groundwork for
further reforms represent real change. I'm pleased our reform process is on
track. I encourage shareholders to take action now on governmental approvals of
the voting share changes, and to continue their efforts at further, more
ambitious, reforms."

With the Governors' approval, the amendment to the Bank's Articles of
Agreement to increase basic votes, which benefit smaller shareholders, now moves
to the 185 member countries for final approval.

In order to take effect the amendment must be approved by three-fifths of
member countries with 85 percent of votes.

According to the statement, this package of reforms include: creating an
additional Chair at the Board for Sub-Saharan Africa, which means that
developing countries can have the majority of seats on the Bank's Board,.

The reforms also included bringing the share of developing countries in
Bank voting power to 44 percent, aimed in particular at adding voice for the
low-income countries.

"As a second step, shareholders have agreed that the Bank should undertake
a comprehensive and intensive work program to realign bank shareholdings, moving
towards an equitable voting power between developed and developing countries,"
it said.

Such a work program, the statement said, would also include voice reforms
at the Bank's affiliated member organization, the International Finance
Corporation (IFC). Work on the second phase is already underway.

Participation of developing countries' nationals in the staff and
management of the World Bank plays an important role in the voice reform.

Already nearly two thirds of Bank staff and 42 percent of all Bank managers
are from developing countries. Since Zoellick became World Bank Group President,
seven of his nine senior appointments have been from developing countries.

IMF deputy chief sees growth return by year end

Special Report:Global Financial
Crisis

DAVOS, SWITZERLAND, Jan. 31 (Xinhua) -- The world
economy could return to growth by the end of this year after being hit hard by
the financial crisis, a senior official of the International Monetary Fund (IMF)
said Saturday.

"We believe that with the adequate policy response
... the world economy can return to growth by the end of this year and to trend
growth in 2010," John Lipsky, first deputy managing director of IMF told
delegates at the World Economic Forum in the Swiss ski resort of Davos.

He said the IMF will need at least another 500
billion U.S. dollars to expand its capital basis as more countries may rely on
its support to tide over the economic turmoil.

Speaking at the same panel discussion, Bank of Canada
Governor Mark Carney said he was more optimistic than a IMF forecast for next
year, based on reason that the stimulus programs installed by various
governments may take effect.

The latest IMF forecast on Wednesday said the world
economic growth is projected to plummet to 0.5 percent in 2009, the lowest in 60
years, before rebounding to 3.0 percent in 2010.

French Finance Minister Christine Lagarde warned that
the world economic crisis could provoke "social unrest."

"Social unrest and protectionism are the two major
risks of the world economic crisis," she said, adding that the risks were
increased by "having to engage taxpayers' money and by hampered growth."

She urged world governments to take decisive actions
before the leaders of the Group of 20 nations (G20) are due to meet in London in
April, a follow-up to their first summit on the financial crisis in Washington
last November.

"We need to give an extremely strong signal as early
as April 2 at the G20 meeting in London to restore confidence in the system,"
she said.

Meanwhile, Carney warned that banks have so far
underestimated the commitments made by governments to calm down the financial
markets, making the bailout efforts less effective.

"They are heavily, too heavily discounting the very
clear commitment from the G7 that no systemically important institution will be
allowed to fail. That is the first line of the Oct. 8 communique which was
literally typed in by the G7 finance ministers themselves," he said, "The power
of that and the degree of commitment to that has been underestimated."

World leaders call for global cooperation to address financial crisis

Special Report:Global Financial Crisis

Backgrounder: World Economic
Forum

DAVOS, Switzerland, Jan. 30 (Xinhua) -- Global
cooperation, rather than a retreat from globalization, is the best approach for
solving the current financial crisis, world leaders said here Friday.

When attending the World Economic Forum annual
meeting in Davos, Switzerland, leaders from Britain, Mexico, South Korea and
South Africa agreed that global cooperation could set a pattern for dealing with
other international challenges, such as climate change, poverty and energy
security.

Founder and Executive Chairman of the
World Economic Forum (WEF) Klaus Schwab (2nd L) speaks at the session "Why
We Need a New System of Global Cooperation?" at the Annual Meeting 2009 of
the WEF in Davos, Switzerland, on Jan. 30, 2009.(Xinhua/World Economic
Forum Swiss-Image.ch)
Photo
Gallery

They called for coordinated actions on a number of
areas, including fiscal and monetary policy measures to stabilize the global
financial system and revive economic growth, reform and recapitalization of the
major multilateral lending institutions, and a resumption of stalled free trade
talks to combat a dangerous turn to protectionism.

Public and private sectors should work together to
solve global problems, the leaders said.

"We need to recognize that these problems were
created by humans and can be solved by humans," British Prime Minister Gordon
Brown said.

"Rather than losing faith and letting the
protectionists take over, or returning to a failed laissez-faire model that says
there is nothing we can do, we have to grapple with these problems and prove we
can come together and solve them," he added.

Brown called on governments to consider "radical
options" for dealing with the problem, such as risk-sharing schemes that would
insure banks and other investors against further losses on toxic assets, saying,
"We need international discussion on what is the best model."

British Prime Minister Gordon Brown (2nd
R) speaks at the session "Reviving Economic Growth" at the Annual Meeting
2009 of the World Economic Forum in Davos, Switzerland, on Jan. 30, 2009.
(Xinhua/World Economic Forum Swiss-Image.ch)
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Mexican President Felipe Calderon said one key lesson
from the previous crisis in the 1930s was the urgency for working out a policy
response, recognizing that delay increases both the economic damage and the
ultimate cost to taxpayers.

South Korean Prime Minister Han Seung-soo cited his
country's experience during the 1997-1998 Asian financial crisis as an example
of how great the costs of a financial rescue can be.

He said South Korea spent the equivalent of 16
percent of its GDP shoring up the country's corporations and financial
institutions during the crisis.

South African President Kgalema Motlanthe said
developed countries should put their own governance in order if they want to be
offered a better seat at the international table.

South African President Kgalema
Motlanthe speaks at the session "Reviving Economic Growth" at the Annual
Meeting 2009 of the World Economic Forum in Davos, Switzerland, on Jan.
30, 2009.(Xinhua/World Economic Forum Swiss-Image.ch)
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Motlanthe also called for a speedy conclusion to the
stalled Doha Round of multilateral trade talks.

Meanwhile, the leaders warned that the financial
crisis might be generating a protectionist backlash in some countries, arguing
that such measures would risk a repetition of the disastrous collapse in world
trade during the 1930s.

Backgrounder: World Economic Forum

Special Report: Premier Wen's "trip of Confidence" to Europe

BEIJING, Jan. 28 (Xinhua) -- The World Economic Forum (WEF) is a Geneva-based non-governmental international organization committed to promoting the world's economic cooperation and exchanges.

The forum, initially known as the European Management Forum, was founded by Klaus M. Schwab, a business professor in Switzerland, in 1971.

In 1987, the European Management Forum changed its name to the World Economic Forum.

The foundation, best known for its annual meeting in Davos, Switzerland, is also called "Davos Forum."

The forum, aimed at improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas, brings together top business leaders, international political leaders as well as selected intellectuals and experts.

With the international situation constantly changing, issues addressed by the forum have gone far beyond the scope of economy. Its agenda now includes the most pressing problems facing the world, ranging from political, military and security concerns to bilateral and regional issues.

The forum has more than 1,000 members currently, all of which are major companies driving the world economy forward. A typical member company is a global enterprise with more than 5 billion U.S. dollars in turnover, though the latter varies by industry and region.

The forum also forges strategic and industry partnerships with its selected members. It sponsors international economic seminars each year jointly with state governments or enterprises worldwide.

With an increasing global influence, the forum has been hailed as the "top-level non-governmental global economic forum."

It has also become the world's most important non-governmental gathering where international political leaders, business leaders as well as leaders of civil and social organizations could exchange views on global economic issues.

Some 2,500 people turned up at the annual Davos meeting on Jan.23-27, 2008. The participants included some 27 state or government leaders, over 110 ministers and many well-known business and political leaders.

Under the theme of "The Power of Collaborative Innovation," the2008 Davos Forum held discussions and debates on a variety of issues such as financial market turmoil, economic uncertainties, the climate change, energy situation and food security.

The forum invited the first Chinese delegation to Davos in 1979. In June 2006, the forum opened its regional office in Beijing.

Davos forum to address financial crisis, other global challenges

WEF Executive Chairman and founder Klaus
Schwab addresses a news conference in Cologny, near Geneva, January 21,
2009. This year's World Economic Forum Annual Meeting is called "Shaping
the Post-Crisis World" and it will be held from January 28 to February 1,
2009 in the Swiss alpine resort of Davos. (Xinhua/Reuters
Photo)
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Gallery

GENEVA, Jan. 21 (Xinhua) -- The World Economic Forum
(WEF) will open its annual meeting in Davos next week with an aim to address a
series of global challenges, particularly the financial and economic crisis, the
organization said on Wednesday.

As well as looking at the immediate crisis and ways
to stabilize and relaunch the global economy, the meeting program also pinpoints
a number of interrelated global risks including climate change, food and water
security, it said in a statement.

The meeting will also consider the institutions that
the world needs to cooperate and confront global challenges and will look to
improve the ethnical value base for business as a constructive social actor, it
added.

According to the Geneva-based non-profit foundation,
the overarching theme of the 2009 annual meeting, which will take place from
Jan. 28 to Feb. 1 in the Swiss skiing resort, is "Shaping the Post-Crisis
World."

It will attract more than 2,500 participants from 96
countries, including a record 43 heads of state or government.

Among the world leaders taking part in the meeting,
Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin will
address participants on the opening day.

German Chancellor Angela Merkel, British Prime
Minister Gordon Brown and Premier Taro Aso of Japan will also address sessions
of the meeting.

Other public figures include 17 ministers of finance,
19 central bankers, 22 trade ministers, 16 ministers of foreign affairs, 15
ministers of environment and energy, nine EU commissioners and the heads of 30
international organizations.

Business leaders from all sectors and from all
regions will also be well represented at the meeting.

"The Annual Meeting 2009 is one of the most crucial
in the near 40 year history of the World Economic Forum," said Klaus Schwab,
founder and executive chairman of the organization.

"The extraordinary participation ...demonstrates that
our annual meeting will be the place where key actors can address both a crisis
of unprecedented scope and, at the same time, the sort of world we collectively
want to see emerging once the crisis is over," Schwab told a media
briefing.

World Bank increases Africa development fund

Special Report:Global Financial Crisis

LAGOS, April 23 (Xinhua) -- The World Bank response to the global economic
recession in Africa through infrastructure development has been jacked up from
600 million U.S dollars to 3.6 billion U.S dollars, according to the reports of
the News Agency of Nigeria.

The World Bank said similar increase was effected on its investment on
agriculture in the region from 430 million U.S dollars to 1.05 billion U.S
dollars.

Oby Ezekwesili, the Vice President, African Region, made this known on
Wednesday in a tele-conference in Washington DC monitored in Abuja.

The World Bank has set aside more than six billion U.S dollars as
International Development Association (IDA) facility for Africa.

Ezekwesili said the infrastructure fund was to upgrade most structures in
Africa to the standards comparable with those in Europe and America.

She explained that in the midst of the hash world financial system only the
best environment could attract investment, saying only negligible nations in
Africa can now boast of standard infrastructures.

"We will use the fund to collaborate with countries in the region to chart
ways for electricity generation and distribution," she added.

"The World Bank is also interested in providing expert advice on road and
railways construction and other things that can drive the economy," Ezekwesili
said.