WASHINGTON, February 3 – Governments came under mounting pressure on Tuesday to reject protectionism as a cushion against the impact of the economic slowndown as anger over the crisis spilled into the streets.
While Australia unveiled a stimulus package to safeguard tens of thousands of jobs and the Japanese central bank launched a huge plan to help banks, President Barack Obama was urged to ditch a "Buy America" clause in his own 900-billion-dollar bid to revive the ailing US economy.
In Europe, Spain announced a sharp rise in unemployment, cementing its place as the country with the highest unemployment in the European Union.
And Sweden said it could inject up to 4.7 billion euros (6.0 billion dollars) into its banks to help boost lending amid the global credit crunch.
Farmers in recession-hit Latvia meanwhile protested in the streets of the capital Riga to demand state aid, while British refinery workers staged another strike against the employment of foreign workers during the economic downturn.
Amid mounting pressure on governments to aid crisis-hit sectors, the head of the International Monetary Fund urged countries to avoid protectionism.
"Beggar thy neighbour policies will never give a good result," IMF chief Dominique Strauss-Kahn said in a speech in Tokyo.
He also said the world economy could see a rapid recovery once it "regains its footing."
The "Buy America" clause in Obama\’s stimulus package has sparked warnings of grave consequences from traditional US allies if it is approved by Congress.
The White House has said that the clause — aimed at ensuring only US products are used on projects aimed at reviving the economy — is still under review.
Senators are currently analysing the bill, whose cost is now estimated at 888 billion dollars (692 billion euros), and could vote on it later this week.
"I don\’t think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars," Senate Republican minority leader Mitch McConnell told reporters.
Meanwhile wildcat strikes by workers at energy plants in Britain, which began last week over the use of foreign labour, continued on Tuesday despite calls from the governments of Portugal and Italy for an end to the protests.
"We want to underline the responsibility of government to avoid this protectionist, xenophobic, nationalist trend," Lisbon\’s Foreign Minister Luis Amado said on Monday night.
In business news, British oil major BP reported a 24-percent slide in fourth-quarter net profit and Swedish truckmaker Scania said its profits in the last three months of 2008 had fallen by 44 percent.
And Japanese high-tech giant Hitachi, which is slashing up to 7,000 jobs, reported a 4.0-billion-dollar net loss for the nine months to December as the slowdown crushes demand for electronic goods.
In Spain, the number of people out of work rose to 3,327,000 in January, the highest level since 1996 when the current method of calculation was introduced.
The crisis also hit consumer spending in Germany, Europe\’s biggest economy, where retail sales fell by an unexpected 0.2 percent in December.
In Switzerland, data showed exports dropped by 10.8 percent in the final month of 2008. "Foreign trade hadn\’t received such a cold shower for years," the Swiss customs office said in a statement.
After launching his plan worth 42 billion dollars (26 billion US dollars), Australian Prime Minister Kevin Rudd said the aim was to support 90,000 jobs "in the face of the unfolding national and international economic emergency."
In Japan meanwhile, the central bank said it would spend up to one trillion yen (11.2 billion dollars) to buy shares held by commercial banks as part of efforts to ease the credit crunch in Asia\’s biggest economy.
In market news, the euro hovered near two-month low points against the dollar amid mounting expectations of a lowering of interest rates in the region.
Europe\’s leading stock markets also fell for a fourth session running, unable to hold on to to early gains after a late rally by Wall Street.