Asia markets down as WB warns on growth

Stocks were mostly down in Asia on Tuesday following a Wall Street tumble, as the World Bank cut its growth forecast for developing East Asia and warned of a ‘painful surge’ in unemployment.
With markets still digesting news of a new Japanese stimulus package to revive Asia’s largest economy, Japan’s central bank kept its super-low 0.1 percent interest rate, hoping to pull out of the worst recession in decades.
Most regional bourses were down as traders moved to book profits from a recent rally. Tokyo’s Nikkei index closed 0.28 percent lower while Hong Kong and Sydney were more than one percent down, following New York’s lead.
The Dow Jones Industrial Index dropped 0.52 percent overnight, while the tech-heavy Nasdaq composite fell 0.93 percent.
Markets have in recent weeks seen renewed confidence in the global economy, while measures in Washington to help banks get rid of toxic debts, as well as last week’s G20 summit, have helped buoy sentiment.
European markets bucked the trend at opening, with the London FTSE 100 up 0.72 percent. The CAC 40 in Paris and the Frankfur Dax were both up a bit over 0.20 percent.
The World Bank said in a new report that growth in developing East Asia is expected to slow to 5.3 percent in 2009, down from 8.0 percent in 2008 and 11.4 percent in 2007. In December it had forecast growth of 6.7 percent this year.
It warned that a massive slump in demand was slashing exports from East Asia, leading to factory closures, rising layoffs and lower wages. Soaring unemployment will prevent millions of people from escaping poverty, it said.
The Washington-based bank added that the Chinese economy would likely start to recover in the second half of 2009, giving a boost to the region as a whole.

The New Age