Collapse of the Global Economy

World's Airlines Expect $9-Billion Loss in 2009

June 8, 2009

Los Angeles Times - With air travel continuing to slump amid a global recession that recently has been compounded by an outbreak of swine flu, airlines are expected to lose about $9 billion this year, or nearly double previous estimates by the industry's main trade group.

The International Air Transport Assn., which represents 230 airlines accounting for 93% of international traffic, said it also revised the industry's estimated loss last year to $10.4 billion from $8.5 billion. "Our industry is in a survival mode," Giovanni Bisignani, the association's chief executive, said today in a state-of-the-industry speech to 500 senior airline executives at the group's annual meeting here. "Today's situation is unprecedented, the most difficult ever."

In perhaps one of the gloomiest forecasts, Bisignani said revenues were expected to decline $80 billion, or 15%, to $448 billion this year compared with $528 billion in 2008. The drop would be more than double what airlines experienced shortly after the Sept. 11, 2001, terrorist attacks that grounded air travel in one of the industry's worst downturns.

Although oil prices have moderated since last summer, the recession has hit all regions of the world, hurting business and leisure travel. Airlines have been slashing airfares to drive demand, but that has not been enough to offset losses from companies that are restricting employees from flying in premium class, the most profitable section of the plane. The outbreak of the H1N1 flu has also added to the airline woes.

"This is the most difficult situation that the industry has faced," Bisignani said. The air cargo business is expected to fall even more, 17%, this year, he said.

U.S. carriers may fare better than others as they have cut flights amid lower demand. Still, North American losses are expected to be about $1 billion for the year, reversing earlier estimates of a $100-million profit for the region's airlines. On Friday, major U.S. carriers reported that May passenger traffic fell an average of about 10%.

Other regions' airlines will also be unprofitable, led by losses of $3.3 billion in the Asia-Pacific region and $1.8 billion in Europe. Among those attending the meeting was Gerard Arpey, chief executive of American Airlines' parent, AMR Corp. "We're in an extraordinarily volatile environment," Arpey said in an interview.

Nearly 25% of Iraqis Live Below Poverty Line

May 20, 2009

Xinhua News Agency - An Iraqi study showed Wednesday that 23 percent of Iraq’s population live below the level of poverty line. Abdul Zahra al-Hindawi, spokesman of the Central Statistics office which carried out the study said that 23 percent of the 27 million Iraqis live below the poverty line, most of them in rural areas of the Iraqi provinces.

Hindawi told reporters the spread of poverty is attributed to the failed infrastructure, corruption and unemployment. He said that the food ration system in Iraq helped to reduce the percentage of the poverty as all Iraqis have ration cards that provide them basic needs of food.

The study comes as Iraq has the world’s third-largest oil reserves, with more than 115 billion barrels. The war-torn country is struggling to rebuild its oil industry after the 2003 U.S.-led invasion that toppled Saddam Hussein.

China: Unemployed Rural Migrants Return to the Cities in Search of Work

March 26, 2009

China Labour Bulletin - About 11 million rural migrants are currently seeking employment in China’s cities, according a new survey by the National Bureau of Statistics. The survey indicates that despite a massive government effort to re-employ returning migrants in their home towns, about half of those still unemployed have already gone back to the cities to look for work.

The survey of 68,000 rural households in 7,100 villages across the country estimated that the total number of rural workers not engaged in agriculture was about 225 million, with 141 million employed outside their home town. About 50 percent of these rural migrant workers (70 million) returned home before the Lunar New Year Holiday, and over 80 percent of those (56 million) had now returned to the cities. Around 45 million migrants had already found work, leaving 11 million still unemployed, the survey said...

Of the estimated 14 million unemployed who stayed behind in their home towns, the National Bureau of Statistics reported that some had found work or set up their own business while others remained unemployed. Separately, the report stated that 23 million returnees were currently seeking reemployment, indicating that some 12 million of those who had stayed in their home towns were yet to find a job.

The vast majority, 71 percent, of the rural migrants who returned home in 2008, did so during the final quarter of the year, reflecting the mass layoffs that ensued in the wake of the global economic crisis - 18 percent returned in October, 28 percent in November and 25 percent in December, compared with just 8.5 percent for the whole of the second quarter of 2008.

Nearly two thirds, 62.4 percent, of all returning migrants were employed in the eastern provinces, with 24.6 percent working in Guangdong. As expected, export orientated manufacturing and construction were the two hardest hit sectors, with 36 percent of returning migrants employed in manufacturing and 28 percent in construction.

The survey estimated that 5.8 percent of returning workers were owed wages, a figure that seems remarkably low given the fact that most layoffs were in manufacturing and construction, the two areas most commonly affected by wage arrears.

Iran's Unofficial Unemployment Rate Tops 30 Percent

May 16, 2009

AP - Many Iranian reformists and conservatives have criticized President Mahmoud Ahmadinejad for spending too much time slamming the U.S. and Israel and not enough trying to fix Iran's economy, which suffers from high inflation and unemployment despite huge oil revenues.

Moderate cleric Mahdi Karroubi is one of two reformist candidates hoping to unseat Ahmadinejad in the June 12 presidential election. Mousavi said Ahmadinejad ignored economists who warned that the president's plan to make direct cash contributions to the masses would worsen inflation and burn through oil revenues that the government relies on for 70 percent of its budget.

"When economic experts warned that liquidity resulting from oil revenues would cause problems, nobody heeded the warnings," Mousavi was quoted as saying by a newspaper on Saturday.

Ahmadinejad was elected in 2005 on a populist agenda promising to bring oil revenues to every family, eradicate poverty and tackle unemployment. The president has defended his cash distributions, saying they would create jobs. But Iran's unofficial unemployment rate tops 30 percent.

Europe in Deepest Recession Since War as Germany Suffers

May 15, 2009

Telegraph - German economic policy is "bankrupt, economists have said. Germany has suffered increasing economic woes, including a record contraction in the first quarter of this year. The declaration was made as it emerged that Europe's biggest economy has now suffered a worse "lost decade" than Japan and is deeper in recession than any other major economy.

On a day of dismal news for the European economy, official figures also showed that Italy, Austria, Spain and the Netherlands are facing their biggest combined slump in post-war history, sparking warnings about the potential for social unrest throughout Europe.

Germany's economy shrank by 3.8pc in the first three months of the year - a record contraction that is almost double the fall of Britain's gross domestic product in the first quarter. The figures sparked attacks on Germany's government, which has repeatedly shown reluctance to bail out either its economy or financial system.

In figures described by economists as "disastrous," Eurostat also reported that Italy shrank by 2.4pc, Austria and the Netherlands by 2.8pc, Spain by 1.8pc and France by 1.2pc. The statistics underline the fact that although Britain's financial system was badly hit in the early months of the crisis, the UK's economy has not fared as badly as its continental rivals, contracting by 1.9pc in the first quarter.

The sharp German contraction - the worst since the Second World War - follows news that the bill for bailing out its economy is likely to exceed the cost of re-unification in the years of austerity after the fall of the Berlin Wall. Economists said that the country's reluctance to move quickly to cut taxes and raise spending was largely to blame...

Hitachi Posts Largest Ever Annual Loss By Japanese Manufacturer

May 12, 2009

AP - Hitachi posted the biggest ever annual loss by a Japanese manufacturer. And warning of more red ink, it said that it doesn't expect the global economy to recover until next year at the earliest.

Hitachi, which produces everything from home appliances to medical equipment to nuclear reactors, said Tuesday it lost 787.3 billion yen ($8.1 billion) for the fiscal year through March. That was far worse than last year's 58.1 billion yen loss and marks the company's third straight year in the red.

Annual revenue tumbled 11 percent to 10 trillion yen, and operating profit — which reflects its core business — plunged 63 percent to 127.1 billion yen.

Hitachi's result is the worst annual net loss for a Japanese manufacturer, according to Shinko Research Institute Co. It is the second-largest in Japanese corporate history after an 834.6 billion yen loss reported by telecommunications giant Nippon Telegraph and Telephone Corp. for the fiscal year ending March 2002...