Japanese economy sees record 15.2 percent contraction

May 20th, 2009 - 4:36 pm ICT by IANS  

Tokyo, May 20 (DPA) The Japanese economy shrank in the January-March quarter at an annualised rate of 15.2 percent, the sharpest annualised drop ever recorded in the world’s second-largest economy, the government said Wednesday.
The data indicated the nation’s worst recession in the post-war era appeared to be more serious than in other major economies such as the US or Europe.

The pace narrowly exceeded the 14.4 percent annualised rate of contraction in Japan’s gross domestic product (GDP) in the last three months of 2008.

A steep decline in Japan’s exports was the leading reason for the first-quarter performance, the Cabinet Office said.

Exports were down a record 26 percent from the previous quarter and 70.1 percent from the same quarter a year ago, it said. Imports declined 15 percent from the October-December quarter and 47.7 percent from January-March 2008.

In absolute terms last quarter, the Japanese economy shrank 4 percent on a quarter-to-quarter basis.

Private consumption, which accounts for more than half of the nation’s GDP, dropped 1.1 percent from the previous three months as consumers refrained from eating out, travelling and making expensive purchases.

Meanwhile, corporate spending dropped a record 10.4 percent from the previous quarter as many firms tried to cut costs.

The Japanese economic situation is likely to remain “severe” despite some signs of improvement such as industrial output, Finance Minister Kaoru Yosano said Wednesday.

“As concerns over significant adjustments in the job market and other areas remain, we need to keep in mind the risk of further downward pressure on the economy,” Yosano said in a statement.

But as companies continue with their inventory adjustments and the government’s stimulus measures begin to take effect, Japan’s economy would return to growth, Yosano said.

With the government’s stimulus package, some analysts say that the worst was over during the January-March period and the economy is now heading for recovery.

During the next three months through June, Nomura Securities Co chief economist Takahide Kiuchi expected the Japanese economy to recover to a 3 percent growth rate.

But he said the momentum would fade toward the end of 2009 after the positive effects from stimulus plans and restructuring measures at businesses would be exhausted.

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