Japan's economy sinks into recession
17/11/2008 17:18
Japan's economy sank into its first recession in seven years in the
July-September quarter as the global financial crisis took a heavy toll on the
world's second largest economy and curbed demand for its exports.
Japan's
gross domestic product (GDP), or the total value of the nation's goods and
services, shrank for a second consecutive quarter in the third quarter of 2008,
down by an annualized 0.4 percent in real terms, following an annualized 3.7
percent contraction in the second quarter, according to a preliminary report
released by the cabinet office today.
Japan, along with the 15-nation
euro-zone, has thus plunged into recession, which is technically defined as
economic contraction in two quarters in a row.
The GDP figures show that "the
economy is in a recessionary phase," said Economic and Fiscal Policy Minister
Kaoru Yosano at a press conference today.
"The downtrend in the Japan's
economy will continue" as the global economy is expected to slow down for the
time being, he added.
Admitting that hard times have come, Yosano urged the
government and the private sector alike to "exert efforts to enable Japan to
achieve positive growth."
Analysts believe that dramatic declines in overseas
demand for Japan's autos and electronics gadgets and the appreciation of yen
against the US dollar, which slash the profit, sales and spending projections,
have dealt a heavy blow to Japan's economy and helped drag it into
recession.
Their opinions were echoed by the cabinet office, which said in
the report that both overseas and domestic demand remained sluggish and weaker
overseas demand made GDP lose 0.2 percentage point -- the largest decline in six
years.
Corporate capital spending, a main driver of Japan's six-year economic
recovery since 2002, slipped 1.7 percent in the third quarter while exports
continued to slow the pace of its growth to 0.7 percent in contrast with a 1.9
percent in imports, according to the government report.
Analysts say the
outlook for the current quarter and beyond is getting more pessimistic, as the
impact of the collapse of the bankruptcy of US investment bank Lehman Brothers,
which owes a combined 320 billion yen (US$3.05 billion) in bonds or loans to
Japan's eight major banking groups, and the subsequent global financial
upheavals, is expected to be felt in the October- December figures.
In the
morning session of today, Tokyo stocks remained mostly sluggish as investors'
sentiments were darkened by anxieties about Japan's economic outlook stoked by
the GDP figures, ending the session at 8,561.19.
The US dollar stood firm in
the upper 96 yen range this morning in Tokyo as dollar selling was capped by the
"recessionary " domestic economic figures.
Xinhua
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