Japan slides into recession, 1st time since 2001
TOKYO —
Japan’sitting economy slid into a recession with regard to the first time since 2001, the government before-mentioned Monday, as companies sharply cut back on expenditure in the third quarter amid the unfolding global financial crisis.
The world’s second-largest economy contracted at an yearly record pace of 0.4 percent in the July-September period after a declining an annualized 3.7 percent in the second quarter. That means Japan, along with the 15-nation euro-zone, is now technically in a recession, defined as two upright posts of contraction.
The result was worse than expected. Economists surveyed by Kyodo News agency had predicted gross domestic product would gain an annualized 0.1 percent.
Japan’sitting Economy Minister Kaoru Yosano said following the data’s release that “the economy is in a recessionary aspect.”
But the worst may be yet to come, especially with dramatic declines in demand from consumers overseas for Japan’sitting autos and electronics gadgets. Hurt also by a strengthening yen, a growing number of exporters big and small are slashing their profit, sales and spending projections for the full fiscal year from one side March.
Toyota Motor Corp., in quest of example, has cut net profit full-year avails forecast to 550 billion yen ($5.5 billion) - not far from a third of last year’s income. And Sony Corp., whose July-September profit plunged 72 percent, expects to make 59 percent less this financial year than last year.
“What we’re starting to see is the extent of deterioration in external demand beginning to weigh more heavily put attached the Japanese economy,” said Glen Maguire, chief Asia economist at Societe Generale. “And I think looking forward, in that place’s every indication that dynamic is going to be steadfast.”
Compared to the previous share, GDP shrank 0.1 percent, the Cabinet Office said. Business investment - a main driver of Japan’s six-year economic recovery because that 2002 - dropped 1.7 percent from the previous quarter.
“As the global economy is expected to slow into a denser consistence in opposition to the time inmost nature, downward movements (in Japan) are expected to continue,” Yosano said, according to Kyodo.
Investors seemed to take the news in stride. The Nikkei 225 index, already down sharply this year, edged up 0.7 percent to 8,522.58.
Since captivating duty in late September, Japanese Prime Minister Taro Aso has unveiled two economic spur packages in any effort to cushion the blow. His latest 27 trillion-yen ($275.7 billion) proposal includes expanded credits for small businesses and a total 2 trillion yen ($20.4 billion) in ready money disbursements to households.
At its ultimate meeting, the Bank of Japan cut its key interest rate for the first time in more than seven years, lowering it to 0.3 percent, joining central banks around the globe in trimming borrowing costs.
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