Stimulus Plans Worldwide


By Elaine Kurtenbach — AP Business Writer

SHANGHAI, China (AP) — President Barack Obama's $825 billion stimulus proposal may be the largest single plan rolled out so far to counter the global economic slowdown. But it's far from the only one.

Across the globe, from China and Singapore to Britain and Brazil, authorities are prescribing heavy doses of lending, cutting interest rates and reducing taxes to help revive economies stalled by the worst financial crisis in 70 years.

In Asia, leaders have pledged a combined $700 billion in stimulus spending, the bulk of it China's 4 trillion yuan, or $586 billion, raft of construction projects aimed at replacing lost factory jobs and encouraging frugal consumers to spend more.

Japan is giving taxpayers cash handouts, while Britain has taken majority stakes in banks and commissioned its central bank to buy up to 50 billion pounds of assets from banks to give them more cash.

To be effective, though, the plans must resuscitate moribund bank lending, create jobs, salvage industries ravaged by the downturn — and eventually coax shell-shocked shoppers back into stores.

But many experts say that a sustained global recovery hinges on the health of the U.S. economy and its huge consumer market. Without that, these stimulus steps may only provide a modest, temporary economic boost.

Here are examples of how several countries, and one continent, are trying to stimulate their economies.


AFRICA: African economies, pinched by the slump in commodity prices and demand for their exports, cannot manage the sort of hefty stimulus packages being pursued by the world's wealthiest nations.

There are steps they can take — Zambia, for example, is stepping up oil exploration and uranium production to help offset the loss of jobs and export revenues from plunging copper prices. On top of such piecemeal measures, U.N. Secretary General Ban Ki-moon has called for a global effort to ensure that help is shared with the poorest nations.


AUSTRALIA: In October, Australia announced a $6.9 billion plan to boost consumer spending by giving grants to people buying their first homes and one-off payments to elderly retirees. Other funds are being used for building infrastructure.


CHILE: Chile's economy and government coffers depend heavily on copper mining — and metal prices have plunged recently.

President Michelle Bachelet has announced a $4 billion stimulus plan aimed at creating 100,000 jobs in the nation of 16.5 million. The plan includes an investment of $700 million in public works projects, including paving streets and repairing public schools and clinics.


CHINA: Battered by the drop in export demand, China's government has announced a $586 billion spending plan, much of which will go to job-creating showcase projects such as new railroads, bridges and dams.

Critical to a recovery is encouraging savings-obsessed consumers to spend more. To pave the way for that, leaders are promising improved government services in areas like health care, education and job training. And key companies like automakers and appliance manufacturers are getting help through subsidies for purchases of computers, televisions and energy-efficient vehicles for rural families.


BRAZIL: The government has taken big stakes in private companies, announced major new investments in home construction for the poor and issued tax breaks designed to increase consumption — including slashing taxes on car purchases to help its auto industry.

The Central Bank has slashed rates and the country's National Development Bank will make up to $166 billion available this year for Brazilian businesses that are not able to find credit on international markets.


BRITAIN: In October the British government offered a 37 billion pound ($52 billion) bailout of the country's major banks — Royal Bank of Scotland, Lloyds TSB Group PLC and HBOS PLC. Last week it announced a second round of measures to ease pressure on the ailing banks, including an insurance program to protect banks from potential losses.

Additionally, the Bank of England has aggressively cut interest rates to their current historic low of 1.5 percent, and Treasury chief Alistair Darling announced a 2.5 percent cut in the national sales tax late last year. On Tuesday, ministers announced a 2.3 billion pound ($3.3 billion) package designed to boost the country's ailing auto industry.


GERMANY: German Chancellor Angela Merkel's Cabinet has approved a new euro50 billion ($67 billion) stimulus plan designed to help Europe's biggest economy. The plan includes investments in infrastructure, tax relief, reductions in health care contributions and money for families with children. It adds to an earlier, euro23 billion plan that was criticized at home and abroad as too cautious.

The German economy went into recession last year as the global crisis sapped demand for exports. It is expected to shrink by more than 2 percent this year, which would be by far its worst performance since World War II.


JAPAN: Japan's parliament has approved a cash payout to taxpayers of 2 trillion yen, or $22 billion — about $700 per family of four. But many Japanese oppose the government rebate, calling it a waste of money that will only further bloat the country's budget deficit.

The government has also expanded credit for small businesses and is considering cutting unemployment insurance premiums and offering housing support to laid-off workers forced to leave company dormitories.


MEXICO: Mexico, which sends 80 percent of its exports to the United States and depends heavily on the dwindling money sent home by migrants, has announced $4.4 billion in emergency infrastructure spending for 2009. It has also implemented sweeping energy price cuts to curb inflation.

Heavily dependent on oil income, Mexico's government hedged against falling oil prices to protect public spending and has used substantial foreign reserves to keep its currency afloat.


SINGAPORE: To dissuade companies from laying off workers, Singapore said it plans to subsidize 12 percent of the first $1,670 of each employee's monthly wages. To encourage lending, it also proposes assuming 80 percent of the risk on private bank loans of up to $3.34 million.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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