Thursday, 21 May 2009

Japanese economy suffers record contraction

Japan's economy fell at a record rate in the first quarter of this year. Bloomberg reports:

Japan’s economy shrank by a record last quarter as exports collapsed and consumers and businesses slashed spending, a decline that probably marked the low point in the country’s worst recession since World War II.

Gross domestic product fell an annualized 15.2 percent in the three months ended March 31, following a revised fourth- quarter drop of 14.4 percent, the Cabinet Office said... The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955...

GDP fell 4 percent on a non-annualized basis...

Weaker domestic demand was the biggest contributor to the decline, shaving 2.6 percentage points off GDP, the most since 1974. Net exports -- the difference between exports and imports -- was responsible for 1.4 percentage points of the drop.

But the economy could already be stabilising.

Still, reports in the past month suggest the world’s second-largest economy may grow for the first time in a year this quarter, albeit from a low point, as exports stabilize and Prime Minister Taro Aso’s 15.4 trillion yen stimulus plan, announced in April, takes effect.

See also my post on Monday.

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