Japanese Economy Shrinks 2.4% as Exports Decline; Recession Looms
August 13th, 2008Via: Bloomberg:
Japan’s economy, the world’s second biggest, contracted last quarter as exports fell and consumers spent less, bringing the country to the brink of its first recession in six years.
Gross domestic product shrank an annualized 2.4 percent in the three months ended June 30 after expanding 3.2 percent in the first quarter, the Cabinet Office said today in Tokyo. The Nikkei 225 Stock Average fell 2.1 percent, the most since Aug. 1.
Exports dropped for the first time in three years, robbing Japan of the engine that drove its longest postwar expansion, while record fuel and food prices deterred spending at home. Toyota Motor Corp. last week reported its worst earnings decline in five years as U.S. sales slumped, and Japan Airlines Corp. said it will cut wages to counter rising costs.
“The economy will keep flying at a low level this year as demand weakens, even from Europe and Asia,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group in Tokyo. “Japan’s economy is deteriorating.”
The yen rose because investors reduced holdings of riskier assets on concern that Japan’s contraction signals a deepening global economic slump. The currency traded at 108.82 per dollar at 4:30 p.m. in Tokyo from 109.33 before the report.
