The global economy may shrink 1-2 per cent this year, World Bank President Robert Zoellick said, as revised Japanese data confirmed the world's No. 2 economy suffered its deepest slump since the oil shock of 1974.
The latest grim snapshot of the world economy highlights the need for urgent action as G20 finance chiefs prepare to meet in Britain, but doubts have emerged whether they will make much headway due to divisions over how best to fight the downturn.
"We haven't seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times," Zoellick told the Daily Mail.
China, the engine of world growth in recent years, saw industrial output growth shrink to a near standstill at the start of the year, but a continued surge in bank lending in February spurred optimism of a rebound soon.
Asian share markets mostly fell, as a burst of optimism fuelled by Citigroup revealing it had been profitable for the first two months of the year proved short lived.
In export-driven Japan, companies such as Toyota and Sony have been aggressively scaling back production and cutting jobs to cope with collapsing demand.
Revised data on Thursday showed the economy shrank 3.2 percent, or an annualised 12.1 percent, in October-December, slightly less than the initial estimate.
A rise in inventories led to the slight revision, but analysts said that was nothing to cheer as it reflected slowing demand both at home and abroad and not companies' appetite to produce more.
"The data confirm that Japan's economic state is quite severe. We see a sharp decline in exports, which puts Japan in a bad situation because exports are falling everywhere," said Seiji Adachi, senior economist at Deutsche Securities.
The Nikkei average fell 1.1 per cent, after surging nearly 5 percent in the previous session alone.
Reuters