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Japan economy shrinking at 10pc in Q4 - Naveed Yaseen - 02-14-2009 08:57 AM
TOKYO: Japan’s economy likely contracted at an annual pace of more than 10 per cent in the fourth quarter, analysts predict, reflecting the collapse in global demand that is battering the world’s second-biggest economy.
The Cabinet Office is expected to reveal Monday that gross domestic product in the October-December period plunged an annualized 11.7 per cent, according to a consensus of market forecasts.
That would mark the steepest drop for Japan since the oil shock of 1974 and far outpaces declines of 3.8 per cent in the US and an estimated 1.2 per cent in the euro-zone.
With recovery nowhere in sight, Japan is now in the midst of its worst downturn since World War II, analysts say.
“Since October economic indicators have deteriorated at a pace that defies any rule of thumb,” Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs, said in a recent report. “There has been an unprecedented large decline in exports and production-related indicators in particular, not only in Japan but throughout Asia.”
Goldman Sachs predicts GDP, the total value of the goods and services produced in a country, will tumble an annualized 8.8 per cent in the fourth quarter, and fall 3.8 per cent for all of 2009. That would be worse than the 2 per cent contraction in 1998 during Japan’s last financial crisis.
JP Morgan predicts GDP will decline at a 9 per cent pace in the fourth quarter and expects the figure to worsen to 12 per cent this quarter.
“Adding to the dismal forecast, we remain cautious about unexpected events in financial markets, including a sudden further appreciation of the yen and another plunge in equity prices, toward the end of the fiscal year in March,” said Masamichi Adachi, senior economist at JP Morgan in Tokyo, in a note to clients on Friday.
Japan’s exports plummeted a record 23 per cent in the fourth quarter, as the deepening global slowdown choked off demand for the country’s cars and gadgets. Even demand from emerging markets, which had earlier partly offset declines in North America and Europe, dropped sharply.
The figures underscore the vulnerability of Asia’s export-driven economies during global downturns and point toward more cuts in jobs, production and profits in the coming months.
http://www.thenews.com.pk/daily_detail.asp?id=162450