Japan's Economy Plunges Back Into Recession After GDP Shrinksgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Mar 12, 2000 - 09:19 PM
Japan's Economy Plunges Back Into Recession After GDP Shrinks
By Joseph Coleman Associated Press Writer
TOKYO (AP) - Japan's economy plunged back into recession at the end of last year, the government said Monday, fanning doubts about whether the country can pull out of its worst economic slump in decades. Gross domestic product, the total value of Japan's goods and services, fell 1.4 percent in the October-December quarter compared to the July-September period, the Economic Planning Agency said.
It was the second consecutive quarter of GDP decline, meaning the economy was officially back in recession after a few fitful quarters of anemic growth fueled by a massive government spending binge.
GDP shrank 1 percent in the July-September quarter.
Officials shook off the grim announcement, however, saying the October-December decline was an aberration among an overall improving landscape for the world's second-largest economy.
"Everyone knows consumption in the January-March will be good," Finance Minister Kiichi Miyazawa told reporters. "The fact is the economy is clearly improving." Monday's numbers were still a shock.
The decline was much steeper than the 0.9 percent drop market analysts had predicted. If the economy performed the same way for a whole year, it would shrink a dramatic 5.5 percent.
The October-December plunge was also the third-largest on record, beat only by the contractions that followed the 1974 oil shock and the 1997 imposition of a higher consumption tax, the EPA said.
At the root of the decline was the persistent problem of the economy: the pessimistic Japanese consumer. Domestic consumption fell a steep 1.6 percent in the October-December quarter.
The EPA said the Japanese economy now needs to grow 2 percent in the January-March period for the country to achieve its target of 0.6 percent growth in the fiscal year ending March 31.
Last week, EPA chief Taichi Sakaiya predicted 1 percent growth for the next fiscal year, which begins April 1, rising to 2 percent growth in the fiscal year after that.
The Nihon Keizai Shimbun newspaper reported Sunday that the EPA will upgrade its assessment of the economy to say it is showing "signs of staging a self-sustaining recovery" in its monthly economic report this month.
It would be the first time since the current economic downturn began in April 1997 that EPA has used the phrase "recovery" in its monthly report and the first time in five months for the agency to upgrade its assessment, the newspaper said.
The Asia financial crisis, which began in Thailand in 1997, pushed Japan, the world's second largest economy, into its worst recession since World War II. It later began to recover, but consumer spending is still low, as many Japanese remain nervous about the fate economy and the security of their jobs.
-- Carl Jenkins (Somewherepress@aol.com), March 13, 2000