Gloomy year-end picture for global economy

WASHINGTON, December 27, 2008 (AFP) – Christmas retail sales plunged in the United States, a poll showed Friday, as Japan reported record cuts in production and more signs emerged that Spain has entered a recession. A leading think tank in London also forecast the British economy would shrink by 2.9 percent next year in the biggest contraction since the end of World War II as retailers slashed prices in a bid to boost post-Christmas sales.

US retail sales dropped by nearly eight percent for the traditional November-December shopping period, making it one of the worst holiday shopping periods in decades, the MasterCard Inc.’s SpendingPulse unit said in a report.

“A difficult economic environment combined with unfavorable weather… made 2008 one of the most challenging holiday shopping seasons in decades,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

Among the worst hit were the apparel, and electronics and appliance categories.

The holiday season is seen as a make-or-break period for many retailers and a key for the struggling US economy, which relies on consumer spending for 70 percent of activity.

US share prices shrugged off the gloomy data and ended h