Thesun 2009-01-30 Page12 Economic Outlook Just Gets Worse And Worse

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theSun

| FRIDAY JANUARY 30 2009

news without borders

Obama savours stimulus win but fights loom

Economic outlook just gets worse and worse LONDON: The world faces its worst recession since the Second World War, with the UK on course to be bottom of the international growth league among the major advanced economies, according to the latest forecasts from the International Monetary Fund. The British economy will shrink by 2.8% this year, says the IMF, with dire implications for jobs, house prices and the public finances. As recently as November, the IMF forecast a relatively mild downturn of 1.3% in the UK. In its latest World Economic Outlook, the IMF now sees economic activity contracting by around 1.5% in the US, 2% in the eurozone, and 2.5% in Japan. Two of the brightest stars in the economic firmament, China and India, have seen their growth forecasts slashed, to 6.75% and 5% respectively. The global economy as a whole is perilously near to shrinking, with a mere 0.5% growth predicted – the lowest since the 1940s. “We now expect the global economy to come to a virtual halt,” said Olivier Blanchard, the IMF’s chief economist. The International Labour Organisation said global unemployment and poverty are set for a “dramatic increase” in the coming year. The UN agency added that in a worst-case scenario, recorded unemployment could rise by more than 50 million from the 2007 level to a total of 230 million, or 7.1% of the world’s labour force, by the end of 2009. The scale of economic decline forecast for Britain by the IMF suggests that the jobless figure would exceed three million within a year, surpassing peaks last experienced in the 1980s.

Yesterday, the Institute for Fiscal Studies said Britain faces a £20 billion (RM1.1 trillion) a-year “double whammy” of tax rises and spending cuts to restore public finances to order – it will take until 2029 for government debt to recede to levels seen before the credit crunch. It warned taxes would rise and spending would be cut whoever wins the next election. As Gordon Brown spoke of the “deep world recession”, the reports added to jitters among Labour MPs. They are starting to express concern that the government’s blizzard of initiatives are cutting little ice with the public and are urging Brown to find “new language” to explain his measures. One senior Brown ally said: “He needs to use simpler language to explain the measures we are taking. He keeps repeating phrases like ‘global recession’, but that is too much jargon. He needs to say, ‘We’re facing prob-

lems. The whole world is facing problems. But we’re helping to sort it out.’ The average man is not going to understand our message if it contains too much economics.” Opposition parties seized on the double blow to Brown’s efforts to reassure his MPs. George Osborne, the shadow Chancellor, said: “Gordon Brown cannot answer the simplest question of all: if Britain is well prepared as he claims, why are we facing the worst recession in the world?” Vince Cable, the Liberal Democrats’ Treasury spokesman, claimed the IMF report exposed Brown’s “lie” that Britain is well placed to deal with the recession, because it faces a bigger slowdown than Europe and the US. “The Prime Minister likes to pretend Britain is simply the victim of a global crisis, but many of the UK’s problems are clearly home grown,” he said. – The Independent

An elderly couple outside a store in London. IMF predicts that the jobless figure in Britain would exceedd three million within a year.

EPAPIX

Thailand agrees to give UN access to boat people BANGKOK: Thailand’s foreign minister said yesterday he had agreed “in principle” to allow the United Nations refugee agency UNHCR access to 78 boat people from Myanmar recently detained in the kingdom. Boatloads of the Rohingya minority, who a UN official said face “very difficult circumstances” in Myanmar, wash up on Thai shores in rickety vessels each month trying to escape poverty and hardship back home. Thailand has recently been accused of cruelty toward the group, including beating new arrivals and sending them back to sea with few supplies. “The foreign ministry will discuss with security bodies this afternoon, and when we reach agreement we will give the answer to UNHCR so that they can send a representative to meet them,” Kasit Piromya told reporters. “I have agreed in principle.” A Thai court on Wednesday convicted 66 of the 78 Muslim Rohingya who arrived on the western coast a day earlier to five days in detention for illegal entry. The 12 others were

teenagers who were too young to be tried. The UNHCR has been pressing the Thai government for access to arriving Rohingya since reports of mistreatment emerged earlier this month, and yesterday the UN body’s representative in Thailand, Raymond Hall, met Kasit. “We have asked for access to a specific group of people and we are waiting for the formal reply, but I have received every indication that it is positive and I expect we will get an official reply,” Hall told reporters. He said he also hoped the government would carry out a transparent investigation into reports the Rohingya were mistreated here, and highlighted the plight of the Muslim ethnic group living in Myanmar. “It is a population that lives under very difficult circumstances ... it is a population which I would say are stateless,” Hall said. A Myanmar government official yesterday denied that there were any Rohingya in Myanmar, despite reports that up to 700,000 of the minority live in its western regions near the border with Bangladesh.

WASHINGTON: Handing US President Barack Obama his first big win, the divided US House of Representatives on Wednesday approved a huge stimulus bill he touted as vital to saving the US economy from collapse. But the US$819billion (RM2.9 trillion) measure passed without a single vote from Obama’s Republican foes, frustrating his high-profile hunt for bipartisan support after campaign promises to drain Washington politics of decades of bile. Still, Obama said he was “grateful” after the House approved the measure by a vote margin of 244-188, with 11 Democrats joining Republicans, and that he was willing to make changes to the legislation as it moves through the Senate. “I hope that we can continue to strengthen this plan before it gets to my desk,” the president, who has pushed the Congress to pass a final measure by mid-February, said in a statement. “But what we can’t do is drag our feet or allow the same partisan differences to get in our way. We must move swiftly and boldly to put Americans back to work, and that is exactly what this plan begins to do,” he said. Republicans, who lacked the votes to block the bill in the House but have significantly more clout in the Senate, promised not to be merely “the party of ‘no’” and signaled they would keep fighting for tax cuts as the best remedy. “Fast-acting tax relief will create more jobs in America than a lot of slow-moving government programmes,” House Minority Leader John Boehner said before the Republicans’ rival bill went down to defeat 266-170. “We want to work with the president. We’ve made clear to him that he’s reached out and we’re reaching out to him because at the end of the day, the American people need a plan that works,” said Boehner. Democrats noted that Boehner had instructed his troops to vote against the measure on Tuesday, hours before Obama wooed Republican support in separate closed-door meetings with party members in the House and Senate. “Today’s vote is

“These so-called Rohingyas are Bangladeshis who left their state for a better life, trying to get sympathy from Western countries by claiming to be Rohingyas from Myanmar,” the official who asked not to be named told AFP. Human rights watchdogs have said the group is largely shunned in Myanmar, with the military junta long denying them citizenship and committing religious persecution against them. Thai officials have said they are worried about the influx of migrants into the kingdom, but have denied any abuse against the boat people. Kasit told reporters that they

a victory for the American people,” said House Speaker Nancy Pelosi, who predicted the plan would help create or save three-four million US jobs. After the US Senate passes its version of the bill, the two chambers will name a “conference” to work out a final compromise measure that, if passed by both sides, would go to Obama. The House vote came hours after Obama made a last-minute call for Republican votes, demanding “bold and swift” action to resurrect US jobs and arrest the US economy’s brutal downward slide. The Senate plan includes:

» US$87 billion (RM313 billion) increase in the federal share for Medicaid, the joint state-federal health insurance plan for the poor. States have complained they are struggling to pay their share of the programme because of lost tax revenues in the recession.

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A US$25 billion (RM90 billion), 10-year injection to Cobra – the Consolidated Omnibus Budget Reconciliation Act that allows workers who lose their jobs and thus health insurance to keep the insurance. The Democratic-led proposal calls for the government to pay 65%of Cobra premiums for people who lost their jobs after September. Last week a report from the Commonwealth Fund found only 9% of people who are eligible for Cobra actually sign up, mostly because it is so expensive.

» US$17.9 billion (RM64.4 billion) for health information technology such as electronic medical records and electronic prescribing. Doctors whose patient list is made up of at least 30% Medicaid patients will get a bonus of 85% of their costs. Hospitals with 10% Medicaid clients will get a bonus that has yet to be calculated. A similar plan would apply to providers to Medicare, the insurance program for the elderly.

» US$1.1 billion to study the comparative effectiveness of various medical tests and treatments through the Agency for Healthcare Research and Quality and the National Institutes of Health. – Agencies

plan to bring up the Rohingya issue at a summit in Thailand late next month of regional grouping the Association of Southeast Asian Nations. “All levels will discuss how to solve this, as there is a human trafficking group sending Rohingya to work in Indonesia, Malaysia and Thailand.” Accusations of mistreatment surfaced earlier this month after nearly 650 Rohingya were rescued off India and Indonesia, some claiming to have been beaten by Thai soldiers before being set adrift on the high seas to die. Hundreds of the boat people are still believed to be missing at sea. – AFP