Russia, China issue economic warning

Russia and China issued stark warnings yesterday about the impact of the crisis on their recently booming economies in 2009, with Moscow saying the downturn could spark unrest in the streets.

In Moscow, a top Kremlin economic aide said there would be a budget deficit in 2009 for the first time for a decade as Russia – the world's second-biggest producer of crude oil after Saudi Arabia – reels from the global crisis.

"The deficit is caused by the fall in oil prices, above all," Arkady Dvorkovich was quoted as saying in reference to the plunge in prices from record highs of $147 per barrel in July to under $40 now.

Commenting on the situation, Deputy Interior Minister Mikhail Sukhodolsky, warned that unpaid wages, the threat of layoffs and unpopular government anti-crisis measures "may aggravate the protest mood".

China's top economic planner also warned of "great challenges" ahead.

The head of the National Development and Reform Commission, Zhang Ping, said "grave risks" lay ahead for goals of fast growth and high employment if the government did not manage to stimulate demand and maintain export growth.

Economists have warned that the global downturn could mean that China will end 2008 with its weakest economic growth for nearly two decades. China has not posted annual growth of less than 7.6 per cent since 1991.

Newspaper reports in crisis-hit Germany, Europe's biggest economy, said the government was planning a second stimulus programme for 2009 that could see the government pump €40 billion ($56bn) into the economy. In a sign of the times in Germany, poodles, terriers and sheepdogs queued up for rations in the country's first soup kitchen for pets, housed in a disused school in the former east Berlin.

The soup kitchen was opened in October and offers free food for pets belonging to pensioners and the Berlin's unemployed.