Now, Japan falls into recession

Japan became the latest major economy to fall into recession with France close behind, and the IMF said it needed at least 100 billion to fight an economic crisis enveloping the world.

Japan became the latest major economy to fall into recession on Monday with France close behind, and the IMF said it needed at least 100 billion to fight an economic crisis enveloping the world.

Meanwhile, the battered auto industry came into focus. The US Senate was to begin debating a bailout later in the day, Germany was to hold talks with General Motors unit Opel, and Japan8217;s Toyota came under ratings scrutiny.

Wall Street looked set for a poor start to the week to follow sharp losses on Friday and European shares were down 2 per cent.

In something of a surprise, figures showed Japan, the world8217;s second-biggest economy, sliding into its first recession in seven years in the third quarter as financial crisis curbed demand for Japanese exports. The 0.1 per cent contraction in July-September was worse than consensus forecasts.

The euro zone is also in formal recession, with two consecutive quarters of contraction, Britain and the United States are on the brink and China is slowing sharply.

Britain8217;s main employers group forecast on Monday that unemployment could rise to almost 3 million by 2010 while France8217;s central bank said that the French economy should contract 0.5 per cent in the fourth quarter.

Policymakers have little doubt that their economies will continue to decline.

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8220;We need to bear in mind that our economic conditions could worsen further as the US and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings,8221; Japanese Economy Minister Kaoru Yosano told a news conference.

International Monetary Fund IMF Managing Director Dominique Strauss-Kahn told the BBC his organisation was likely to need at least 100 billion in extra funding over the next six months to help countries out of the mire.

Financial markets continued to shudder under the joint strain of declining economies and ructions in the financial system. 8220;This weekend8217;s G20 summit failed to deliver any new stimulus measures to rescue the world economy from the current recession, but at least it avoided the knee-jerk responses such as rushed regulation that would have made things worse,8221; Julian Jessop at Capital Economics said in a report.