More global economic pain seen in 2009

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(Agencies)
Updated: 2008-12-31 21:10

SINGAPORE – Investors said good riddance on Wednesday to one of the worst years on record and prayed that massive government rescue plans will pull the global economy out of its fierce tailspin later in the new year.

A shopper stands near sale signs outside the Virgin Megastore in New York's Times Square, December 26, 2008. [Agencies]

But more pain is expected in the near-term as bleak economic reports roll in, signaling more bankruptcies, bad debts and layoffs through at least early 2009, and more sleepless nights for everyone from central bankers to consumers struggling to pay off mortgages and credit card bills.

The biggest financial crisis in 80 years, sparked by the meltdown of the risky US subprime mortgage market, made this year one of the worst ever for investors as recession stalked the global economy.

"It has been a shocking year, hardly anything was spared in the market carnage," said Michael Heffernan, senior client adviser and strategist at Austock Group in Australia.

European shares looked set to end the year with a 45 percent loss, their biggest ever annual drop and roughly in line with gut-churning declines on other major global markets.

The slump wiped out nearly $14 trillion in market value, according to the benchmark MSCI world index of larger companies.

For all markets, the damage was probably much worse. The World Federation of Exchanges, which tracks stock markets in 53 developed and emerging economies, said some $30 trillion in market value evaporated through end-November.

The crisis also radically changed the landscape of global finance, bringing down big US investment banks Bear Stearns and Lehman Brothers, saddling many other international banks with huge losses and crippling the credit system that keeps the world economy humming.

The US S&P 500 benchmark has lost about 40 percent with just one trading day left in 2008. Its biggest yearly drop was in 1931 during the Great Depression, when it fell 47.1 percent.

No sector has been spared from global banks to autos to resources, and even corner stores.

Victims of the crisis are still piling up, with announcements almost daily of fresh company losses, more layoffs, and slumping prices for assets from cars to homes.

Gold was one of the few commodities to end the year higher, gaining about 4 percent, as panicky investors fled stock markets for assets which are seen as safer during times of trouble.

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