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| - G7 leaders on Monday pledged collective action after emergency injections of money by their central bankers failed to arrest the pandemic panic gripping global markets. The G7 pledge was light on detail, however, and deepening slumps on stock indices exposed the limits of official promises after central banks unveiled their plans Sunday. "The G7 is right to recognise that the economic priority is to support those businesses which are now effectively bankrupt around the world -- from airlines to restaurants and hotels," said Charlie Robertson, global chief economist at Renaissance Capital in London. "But they might also need to focus on keeping financial markets functioning at this turbulent time," he told AFP. Dusting off their playbook from the 2008 financial crisis, the US Federal Reserve, European Central Bank, Bank of Japan and others announced measures to try to keep cash pumping through the global economy. In addition to joining the other central banks in enhancing global liquidity swaps, the Fed slashed its key interest rate to virtually zero, and announced massive asset purchases along with more help to encourage bank lending. The New York Federal Reserve went further Monday with a transfusion of another $500 billion in virtually interest-free liquidity. But unlike the banking shock of 2008, which was readily quantifiable, the COVID-19 virus remains an invisible enemy and the world economy could get much worse as national lockdowns take hold. "A significant downturn is looming over the coming months, the only question is how deep it becomes," commented Neil Shearing, group chief economist at Capital Economics. Despite the central banks' efforts to inject some calm, markets in Asia, Europe and the United States resumed their dizzying declines on Monday. "There's an understanding in markets that a recession is almost guaranteed. Authorities throwing money at it helps but cannot stop it," said Jasper Lawler, head of research at traders LCG. "Central banks led by the US shot off a bazooka of lower interest rates and quantitative easing but it has missed (the) target. Markets are back into freefall," he noted. Traders were also spooked as industrial production for January and February in China -- ground zero of the pandemic -- shrank 13.5 percent, the first contraction in three decades. Shares in airlines crashed after carriers in Europe and the United States announced dramatic cuts to their flight capacity and pleaded for state bailouts. Analysts looked to videoconferences of the G7 and a separate one of EU finance ministers to announce joint stimulus plans, again evoking action after the 2008 crisis. The Group of Seven leaders including US President Donald Trump vowed to coordinate and "do whatever it takes, using all policy tools" to safeguard growth. But there were no specifics on how they proposed to "support immediately and as much as necessary the workers, companies, and sectors most affected". Stephen Innes, global chief markets strategist at AxiCorp, said ahead of the G7 talks that specific credit lines were needed for airlines, oil companies and retailers. "Airlines might be at the top of the list for directed fiscal help, but virtually every global industry is facing pressure without a government bailout," he told AFP. Above all, investors want something governments in Europe and the United States have proved unable to deliver -- a fall in new coronavirus cases similar to the trend in China. "There's a lot coming globally from central banks but of course now... it's over to governments to act more aggressively in terms of fiscal stimulus," said Derek Halpenny, head of research for global markets at MUFG. "That is going to be the key going forward, obviously along with the COVID-19 daily data, in terms of where we go (for) investor sentiment," he said in an MUFG podcast. jit/wai
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