Japan’s Economy Enters Into Recession

November 17, 2008

Japan Enters into RecessionJapan (Chattahbox) – After the Euro zone, it’s now Japan’s economy that has entered into recession. Economy of Japan is the second largest economy in the world. It has entered its first recession since 2001 and it is projected that the situation may worsen over the period of time.

Gross domestic product of the country shrank by 0.1 percent in the three months ended September 30th. “The downtrend in the economy will continue for the time being as global growth slows,” said Japanese Economy Minister Kaoru Yosano. “We need to bear in mind that economic conditions could worsen further as the US and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings,” he added.

Osaka is Japan’s second biggest city, but some of the companies there are looking to the heavens for help, says BBC correspondent in Japan, Duncan Bartlett. The Japanese stock index, Nikkei, has already lost a quarter of its value since the beginning of the October. The share index fell on opening as the growth data was released but it regained later and closed up 0.7 percent. Japan’s Economy Minister, Yosano said that the economy is in recession after the data was released.

Most of the major Japanese companies have cut down their net full-year profit forecasts. Toyota Motor Corp. has reported a cut to 550 billion yen ($5.5 billion) which is approximately 30 percent of its last year’s earnings. Profits for Sony Corp. plunged 72 percent and they expect to make 59 percent less this year. The economic crisis around the world has curbed the demand for Japanese products which has directly resulted in the exports of the company. Japan’s economy has experienced the longest period of economic growth since World War II until the sub-prime crisis that started a year ago.


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