Toyota Motor Corp will shut all its factories in Japan for 11 days to combat a global slowdown that is not only hitting company profits but could, a report says, unleash a wave of social unrest in China.
The two factors show how the crisis, likened to the Great Depression of the 1930s in its scope and severity, has spread from the US housing and banking sectors to threaten every part of the world economy.
China relies on strong growth to create jobs for its millions of migrant workers and graduates, but risks an upsurge in protests and riots in 2009 as rising unemployment stokes discontent, a state run magazine said on Tuesday.
The unusually stark report was in this week's Outlook (Liaowang) Magazine, issued by the official Xinhua news agency.
“Without doubt, now we're entering a peak period for mass incidents,” a senior Xinhua reporter, Huang Huo, told the magazine, using the official euphemism for riots and protests.
“In 2009, Chinese society may face even more conflicts and clashes that will test even more the governing abilities of all levels of the Party and government.”
Researchers at the country's central bank forecast China's economy will probably grow a healthy 8% this year, in contrast to many independent analysts who predict a much sharper slowdown.
Governments and central banks have been working overtime to try to limit the fallout of the global crisis, flooding the financial system with cash, cutting interest rates and increasing spending.
South Korea said on Tuesday it aimed to create almost 142,000 jobs this year through infrastructure and environmental projects, part of a five-year, $38 billion plan to generate almost 1 million jobs.
Chile announced a $4 billion stimulus package based on public spending on infrastructure, subsidies and tax rebates.
On Monday, US President-elect Barack Obama met with Republicans and Democrats in Congress seeking support for a stimulus package of up to $775 billion over two years, including hefty tax cuts.
But despite the best efforts of policymakers so far, economic indicators have been almost uniformly dire.
The latest grim reading came from Britain's Nationwide Building Society, which said house prices in the world's fifth biggest economy fell another 2.5% in December to make 2008 the worst performing year on record.
In the United States, auto sales fell 36% in December, figures showed on Monday, to close out the weakest year since 1992 in the world's biggest market.
The fall was led by a sales drop of 53% at Chrysler LLC, 48% at Hyundai Motor and 37% at Toyota. Prospects for a quick recovery looked bleak.
“The first several months of 2009 are going to feel very much like the last few months of 2008,” said Ford economist Emily Kolinski Morris. “We see little to indicate a near-term improvement in either financial market conditions or economic activity.”
Toyota, which saw its worst US monthly sales decline since at least 1980, said it would suspend operations at 12 vehicle and parts plants in Japan for six days next month and five in March in response to declining demand.
The cuts come on top of a three-day suspension at domestic plants this month and after the company, the world's biggest auto maker, warned two weeks ago that it would post its first-ever annual operating loss.
Manufacturers are not the only ones suffering.
Data on the massive euro zone and US service industries due later on Tuesday is expected to show that conditions deteriorated further last month.
But stock markets, many of which suffered their worst year ever in 2008, have taken some heart from the raft of measures either planned or introduced in recent months.
Japan's Nikkei average hit a two-month high and stocks elsewhere in the Asia-Pacific region rose for a seventh straight session on Tuesday.
“Growing expectations for the administration of Obama are making investors that much more willing to take risks, and I think we're also seeing more buying by foreign investors,” said Hideyuki Ishiguro, supervisor at the investment advisory department of Okasan Securities in Tokyo.
MSCI's All-Country World index has jumped 25% since hitting a five-year low in late November. (Reuters)