Published: February 15, 2009
TOKYO ? Japan?s economy, the world?s second largest, is deteriorating at its worst pace since the oil crisis of the 1970s, hurt by shrinking exports and anemic spending at home.
The country?s real gross domestic product shrank at an annual rate of 12.7 percent from October to December after contracting for two previous quarters, the government said Monday. When compared with the third quarter of 2008, Japan?s economy fell 3.3 percent.
The fourth-quarter results were Japan?s worst quarterly drop since its economy contracted at an annual pace of 13.1 percent in the first three months of 1974.
The sharp downturn is exposing the vulnerability of Japan?s export-driven economic recovery. The dismal figures also place Japan firmly among the worst-hit in the global crisis, dwarfing economic declines in the United States and Europe.
Though Japan first appeared relatively unscathed, its economy has been hurt in recent months by declining overseas demand and a stronger yen.
Exports slumped as consumers abroad bought fewer Japanese cars and electronics. Capital outlays were hurt as companies halted production lines and cut investment. Consumer spending also stalled as households reined in spending amid huge layoffs.
?At one time, it looked like Japan escaped the brunt of the financial crisis. Now we see Japan?s most damaged because it?s so dependent on trade, which is stalling,? said Hideo Kumano, chief economist for the Dai-Ichi Life Research Institute. ?This shows how feeble Japan?s economic fundamentals were in the first place.?
Government officials have hinted that Japan would consider drafting a fresh fiscal stimulus package to stem the downturn. Prime Minister Taro Aso has already promised stimulus spending worth almost 50 trillion yen ($545 billion) in two packages unveiled late last year. But political bickering in a deeply divided Parliament has slowed progress.
TOKYO ? Japan?s economy, the world?s second largest, is deteriorating at its worst pace since the oil crisis of the 1970s, hurt by shrinking exports and anemic spending at home.
The country?s real gross domestic product shrank at an annual rate of 12.7 percent from October to December after contracting for two previous quarters, the government said Monday. When compared with the third quarter of 2008, Japan?s economy fell 3.3 percent.
The fourth-quarter results were Japan?s worst quarterly drop since its economy contracted at an annual pace of 13.1 percent in the first three months of 1974.
The sharp downturn is exposing the vulnerability of Japan?s export-driven economic recovery. The dismal figures also place Japan firmly among the worst-hit in the global crisis, dwarfing economic declines in the United States and Europe.
Though Japan first appeared relatively unscathed, its economy has been hurt in recent months by declining overseas demand and a stronger yen.
Exports slumped as consumers abroad bought fewer Japanese cars and electronics. Capital outlays were hurt as companies halted production lines and cut investment. Consumer spending also stalled as households reined in spending amid huge layoffs.
?At one time, it looked like Japan escaped the brunt of the financial crisis. Now we see Japan?s most damaged because it?s so dependent on trade, which is stalling,? said Hideo Kumano, chief economist for the Dai-Ichi Life Research Institute. ?This shows how feeble Japan?s economic fundamentals were in the first place.?
Government officials have hinted that Japan would consider drafting a fresh fiscal stimulus package to stem the downturn. Prime Minister Taro Aso has already promised stimulus spending worth almost 50 trillion yen ($545 billion) in two packages unveiled late last year. But political bickering in a deeply divided Parliament has slowed progress.
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