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Eurozone unemployment rate
hits 10-year peak

BRUSSELS — Unemployment hit a 10-year peak in the eurozone in
May, dimming any prospect of a quick recovery from recession. In Sweden,
the central bank pulled out the stops to revive its economy with a
surprise cut in rates to a fresh record low and more loans to banks to
foster lending.
The jobless rate in the 16-nation eurozone rose to 9.5 per cent in May
from April’s 9.3 per cent, the highest rate since 1999, European Union
data showed. “May’s sharp increase in eurozone unemployment demonstrates
that the ‘green shoots of recovery’ are not yet showing up in the labour
market,” economist Martin van Vliet of ING said.
“With the economy still in recession and any near-term recovery likely
to be muted, unemployment looks set to continue to rise this year and
next”. Statistics office Eurostat calculated that 3.4 million people in
the currency zone lost their jobs in the year from May 2008, with 5.1
million joining jobless queues across the 27-nation EU.
Rising unemployment is emerging as the biggest challenge to recovery,
which governments around the world are trying to stoke with record low
interest rates and by pumping trillions of dollars into their economies.
In Sweden, the central bank cut rates to 0.25 per cent from 0.50 per
cent in a surprise move, putting official rates at their lowest since
records began in 1907.
It also offered 100 billion crowns ($13.2 billion) of loans to banks to
foster lending as it sought to reverse its worst recession since the
1940s.
In Britain, data showed a decline in activity in the construction sector
accelerated in June and UK lenders said they did not expect much of a
pick-up in demand in the third quarter even though they would make more
credit available.
The Bank of England’s David Miles warned parliament that while the next
few quarters could see a rebound, a return to rapid growth was unlikely.
In Japan, Economics Minister Yoshimasa Hayashi said he will do his
utmost to prevent price falls from persisting in the economy, which is
facing its second bout of deflation this decade.
In a sharp contrast to weakness in industrialised nations, India’s
finance ministry said the Asian giant could see growth of around 7 per
cent this year and more in coming years if it makes sweeping reforms.
“India should be back on the new trend growth path of 8.5 to 9 per cent
per annum provided the critical policy and institutional bottlenecks are
removed,” the report said.
In China, the government raised the stakes in its long-haul drive to
unseat the dollar as the world’s dominant currency, seeking a debate on
an alternative reserve regime at next week’s Group of Eight summit. G8
sources said that Beijing has asked to debate its proposals at the
summit in Italy and the issue could be mentioned in the summit
statement. China’s deputy foreign minister said he was unaware of such a
request, but that it would be “normal” for the issue to be raised during
the meeting. — Reuters |