Japan became the latest major economy to fall into recession today with France close behind, and the IMF said it needed at least $100 billion to fight the billowing economic crisis enveloping the world.
In something of a surprise, figures showed Japan, the world's second-biggest economy, sliding into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports.
The 0.1 per cent contraction in the world's second-largest economy in July-September was worse that 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.
Policymakers have little doubt that their economies have not finished declining.
"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," 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. Oil fell more than $1 to below $56 a barrel and MSCI's main world stock index was down half a percent for a 46 per cent year-to-date loss.
Leaders of the world's 20 largest economies, meeting in Washington over the weekend, agreed on a host of steps to rescue the global economy.
But they left it to individual governments to tailor their response to their own circumstances and troubled industries.
The post-meeting statement from the group of major industrialised and developing countries contained a laundry list of reform pledges aimed at soothing volatile markets and calming consumers' worries.
"This weekend'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," Julian
Jessop at Capital Economics said in a report.
The G20 statement said that all financial markets, products and participants would be subject to supervision, vowed tougher accounting rules, a review of compensation practices and greater cooperation between national regulators.
Finance ministers were told to develop specific plans with the first set of actions to be completed by the end of March, and a follow-up meeting held by the end of April.
Japanese car giant Toyota Motor Corp was put on a negative ratings watch by Fitch Ratings because of the global downturn and the stronger yen. It cited unprecedented challenges" in the automotive industry.
Reuters