Japanese economy shrinks at record pace in first quarter
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The Associated Press
Oluşturulma Tarihi: Mayıs 21, 2009 00:00
TOKYO - Japan's economy contracted at the fastest pace since 1955 as exports plunged, companies slashed production and families spent less.
Japan's real gross domestic product, or the total value of the nation's goods and services, shrank at an annual pace of 15.2 percent in the January-March period, the government said yesterday.
The drop was the steepest since Japan began compiling GDP statistics more than five decades ago. It also marks the fourth straight quarter of decline after the GDP fell a revised 14.4 percent in the October-December period. "Weakness in the corporate sector is gradually spreading to households," Prime Minister Taro Aso told lawmakers in a parliamentary budget hearing. "This is a very serious situation, so we need to respond appropriately."
On a quarterly basis, GDP fell 4 percent from the previous three-month period, according to the Cabinet Office's preliminary data.
Japan's first quarter results were markedly worse than other major economies, outpacing the euro zone's 2.5 percent quarterly decline and a 1.6 percent contraction in the U.S.
The world's second biggest economy had relied heavily on the rest of the world to buy its cars and gadgets to drive economic growth. Like its Asian neighbors, it has been pummeled by the unprecedented collapse in global demand triggered last year by the U.S. financial crisis. Japan's exports plummeted a record 26 percent in the first quarter from the fourth quarter, the government said.
In response, major exporters such as Toyota Motor and Sony have moved quickly to adjust by reducing shifts, suspending factory lines and announcing thousands of job cuts over the past few months. Japan's jobless rate jumped to 4.8 percent in March, the highest in more than four years.
Capital expenditure - business investment in factories and equipment - fell 10.4 percent from the previous quarter, while consumer spending slipped 1.1 percent. Unlike previous downturns, consumption has weakened much more than income, said Richard Jerram, chief economist at Macquarie Securities in Tokyo.
"The savings rate has gone up and that has worsened the severity of the recession," he said. "That is something which is novel about the last six months. It seems that the public has basically panicked about job security to an extent that hasn't happened in previous cycles."
The drop was the steepest since Japan began compiling GDP statistics more than five decades ago. It also marks the fourth straight quarter of decline after the GDP fell a revised 14.4 percent in the October-December period. "Weakness in the corporate sector is gradually spreading to households," Prime Minister Taro Aso told lawmakers in a parliamentary budget hearing. "This is a very serious situation, so we need to respond appropriately."
On a quarterly basis, GDP fell 4 percent from the previous three-month period, according to the Cabinet Office's preliminary data.
Japan's first quarter results were markedly worse than other major economies, outpacing the euro zone's 2.5 percent quarterly decline and a 1.6 percent contraction in the U.S.
The world's second biggest economy had relied heavily on the rest of the world to buy its cars and gadgets to drive economic growth. Like its Asian neighbors, it has been pummeled by the unprecedented collapse in global demand triggered last year by the U.S. financial crisis. Japan's exports plummeted a record 26 percent in the first quarter from the fourth quarter, the government said.
In response, major exporters such as Toyota Motor and Sony have moved quickly to adjust by reducing shifts, suspending factory lines and announcing thousands of job cuts over the past few months. Japan's jobless rate jumped to 4.8 percent in March, the highest in more than four years.
Capital expenditure - business investment in factories and equipment - fell 10.4 percent from the previous quarter, while consumer spending slipped 1.1 percent. Unlike previous downturns, consumption has weakened much more than income, said Richard Jerram, chief economist at Macquarie Securities in Tokyo.
"The savings rate has gone up and that has worsened the severity of the recession," he said. "That is something which is novel about the last six months. It seems that the public has basically panicked about job security to an extent that hasn't happened in previous cycles."