MercoPress. South Atlantic News Agency

World economic confidence index falls to 20-year low

A world economic confidence index released Thursday dropped to its lowest level in 20 years amid further news of heavy losses on global markets and an ongoing crisis among the world's carmakers.

The index, drawn up by German institute Ifo, was released as fears of a looming global economic recession grow. The Munich-based Ifo institute said global economic confidence fell in this year's fourth quarter to 60 points from 73.4 points in the third quarter. "Altogether the data points to a global recession," the institute said releasing the report, adding that expectations for the coming six months have worsened further. "The cooling off in the ... world economic climate has this time affected not only the major economic regions of North America, Western Europe and Asia but also Central and Eastern Europe, Russia, Latin America and Australia," Ifo said as the fallout from the financial crisis spreads around the world. Based on a survey of about 1,000 analysts in 91 countries, the survey's fourth-quarter decline took the closely watched index down to well below its long-term average of 96.8. The release of the Ifo survey came in the wake of a new grim warning from the US Federal Reserve about the outlook for the US economy and another share sell-off around the world. European stocks plunged to five-year lows early morning Thursday as market trade in London, Paris and Frankfurt all dropped by more than 2 percent. The losses followed another treacherous day on Wall Street and sharp losses in Asia. The continuing downturn has not done any favors for the struggling auto industry, either. France's PSA Peugeot Citroen announced it would cut 3,550 jobs, and Britain's Rolls-Royce, which is also a maker of plane engines, said it would cut up to 2,000 jobs worldwide. In Japan, Isuzu Motors said it would cut 1,400 jobs and downscale domestic production by 10%. In the US General Motors, Ford and Chrysler warned of a "catastrophic collapse" of the industry if the government did not approve multibillion-dollar loans for the auto giants. As global markets were further strained Thursday and the crisis among automakers deepened, governments were prompted to take further measures to soften the blow to their economies. French President Nicolas Sarkozy has outlined a sovereign wealth fund to plug any holes that could lead to the collapse of major French companies or expose them to foreign buyouts. Sarkozy's plan to "intervene massively" in companies of strategic national importance earned sharp criticism from neighbor Germany. Germany's influential central bank warned in its latest monthly bulletin that Europe's biggest economy faces tough times in the run-up to the end of the year. In China, Yin Weimin, the country's social security minister, said the Asian giant was facing serious unemployment problems due to the economic crisis. "Currently, the employment situation is critical, and this impact (of the crisis) is still unfolding," he said. The government in Beijing said it would provide substantial financial aid to help light industry employers maintain staff, and implement tax cuts aimed at helping the textile industry.