Toyota forecasts first loss

Bloomberg

Toyota, which vies with GM for the crown of the world's largest automaker, said it faced an "unprecedented crisis" and expected an operating loss of 150 billion yen ($1.69 billion) - its first since March 1941.

It follows the financial troubles plaguing the United States where General Motors and Chrysler, two of the U.S. Big Three automakers, are on the verge of collapse.

Finance leaders predicted more doom and gloom for 2009, warning it could be even worse than this year despite frantic government measures to stem the tide of bad data.

"Our forecasts are already very dark, but they will be even darker if not enough fiscal stimulus is implemented," International Monetary Fund director Dominique Strauss-Kahn said. "I can see that some measures have been announced, but I'm afraid it won't go far enough," he told BBC radio, predicting recession for advanced economies and slowing growth for emerging ones.

The IMF has called for global fiscal stimulus of about two percent of GDP, equivalent to roughly $1.2 trillion.

Toyota said it was cutting back on production and investment as a slump in sales and a soaring yen wreaked havoc on its balance sheet, including freezing the launch of a new factory in Mississippi and slashing production in India.

The automaker has enjoyed hefty profits in recent years fuelled by demand overseas, notably in the United States, for its eco-friendly hybrid cars.

But demand has fallen sharply in the United States as the credit crisis at banks drags down the whole economy, and analysts said Toyota's revision showed all automakers are affected, not just Detroit's Big Three which also includes Ford.

Still, there was fresh movement to stop the meltdown, with a decision by U.S. president-elect Barack Obama to add 500,000 jobs to a 2.5-million-job creation goal to kickstart the world's biggest economy. Vice president-elect Joseph Biden also confirmed the Obama team was working on a second economic stimulus package.

According to media reports, they want to craft a package worth between $675 and $775 billion over two years, but which could swell to $850 billion as it moves through the legislative process.

It would be in addition to the $700 billion Wall Street rescue deal signed by President George W. Bush in October, but which has failed to reverse the plummeting U.S. economy.