ANZ chief says recovery could take two or three years: Economy roundup

The bad news continues this morning, with ANZ Banking Group chief executive Mike Smith saying the market recovery will probably take another two to three years.

The bad news continues this morning, with ANZ Banking Group chief executive Mike Smith saying the market recovery will probably take another two to three years.

“We have to maintain our position of strength in the world, and to ensure we are on a better footing and fully prepared for the economic challenges and the opportunities that we are facing,” he said at the bank’s annual general meeting.

Chairman Charles Goode also says there will still be bad times ahead.

“The global financial crisis has not yet stabilised, but we may be three-quarters of the way to that position,” he says. “There will be further bad debts. There will be more regulation. There will continue to be volatility in financial markets.”

Smith and Goode’s preditions were backed up by World Bank president Robert Zoellick, who says the global economy will worsen in the first half of next year along with rising unemployment.

Zoellick says any recovery will depend on how governments work together on how to implement fiscal policy.

“I’m afraid that in the first six months of 2009, there are going to be problems worldwide, including in Asia. This financial, economic and unemployment crisis is serious enough. If we trigger a round of protectionism as we saw in the 1930s, it (the crisis) could deepen,” he says.

The Australian sharemarket has opened more then 1% lower after declines on Wall Street overnight. The benchmark S&P/ASX200 index was down 26.6 points or 0.74% to 3554.6 at 11.45 AEDT.

The dollar lost ground from yesterday, but remains at US69c.

Commonwealth Bank shares have risen 2.2% to $27.07 despite yesterday’s news that its bad debt level may rise to $2.5 billion. Westpac have gained 2.6% to $16.36 while Qantas have gained 5.3% to $2.56 after walking away from merger talks with British Airways.

The Dow Jones Industrial Average lost 219.35 points or 2.49% to 8604.99. Oil prices have also taken a tumble, dropping to a new four-year low of $US36 a barrel. Declining demand has offset the record cut to production by OPEC of 2.2 million barrels per day.

Also in the United States, the US labour market is weakening along with the manufacturing sector, new Government data shows.

The figures reveal that the number of US workers filing new claims for unemployment benefits remains at a recessionary level, up more than 200,000 from a year ago.