By Tomasz Janowski and Ralph Boulton
SINGAPORE/LONDON (Reuters) – Japan’s industrial output tumbled in October, evoking memories of a decade-long stagnation in the 1990s, while major European companies warned of harsh times ahead.
Chinese insurer Ping Ang provided a striking illustration of the global nature of the crisis when, according to a government source, it asked the Chinese government to help seek compensation from Belgium over its losses in the European financial group Fortis after the group’s nationalization.
India, like China a major contributor to global economic growth in recent years, reported better than expected growth of 7.6 percent in the third quarter versus a year earlier. But the economy lost momentum from the previous quarter’s 7.9 percent growth.
Prospects now appear clouded by militant attacks in Mumbai, where operations by Indian commandos on Friday revealed dozens more bodies in a luxury hotel. The violence in India’s financial hub, together with a state of emergency in Thailand, underscored political unrest as another potential threat to emerging markets battered by the crisis.
With the U.S. holiday shopping season kicking off on Friday, the day after the Thanksgiving holiday, businesses and investors in north America expect more grim news. The concern is that even deep discounts offered by struggling U.S. retailers will fail to lure shoppers, fearing for their jobs and squeezed by debt.
Authorities have responded, spurred by mounting evidence that the financial industry upheaval triggered by heavy losses in the U.S. housing market is pushing the world economy into its worst downturn in decades.
The most alarming economic figures on Friday came from Japan. The world’s second-largest economy announced a fall of 3.1 percent in industrial output for October, more than expected, with a drop more than twice as big predicted for November.
Household spending fell 3.8 percent from a year earlier, also more than expected.
The speed at which Japanese firms were slashing production and consumers were scaling back their spending, surprised economists and suggested the economy was in for a deeper and longer recession than earlier thought.
“Production is falling much faster than we had expected. Companies are adjusting their production very quickly,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research. “The auto makers are the worst hit, but their turmoil is starting to spill over to other sectors, such as steel makers.”
Results from Austrian builder Strabag highlighted the spread of the crisis into broader commerce that has increased bankruptcies and unemployment throughout the world.
Strabag announced it would cut its investments by more than half next year. Shares in Strabag, one of Europe’s biggest builders, have lost 72 percent this year. more