Japan's economy contracts as recession looms

Nov 12, 2012 12:00 AM

Japan's economy contracted at a pace of 0.9 % in the three months through September, according to government data, with sluggish imports compounding a slowdown in demand which nudged the economy toward recession.
The gross domestic product was down to an annualised 3.5 % contraction in a reversal from Japan's robust performance earlier this year, when it performed better than most of its peers in the Group of 7 industrialised nations.

Growth has stalled since on falling exports amid economic woes in Europe and a damaging territorial standoff with China.
Competitiveness of Japanese exports had also taken a beating due to a strong yen. Slowing pace of reconstruction following the earthquake, tsunami and nuclear disaster had also hit growth at home with private consumption falling at the greatest rate since early 2011.

''These are tough numbers,'' prime minister Yoshihiko Noda told a parliamentary session. He added, the government, which had undertaken the post-disaster reconstruction effort with yen 20 tn, in spending, would consider further measures ''with a sense of urgency”.
However, according to some economists the Japanese economy would continue to shrink in the next quarter, landing it in a recession before conditions improved.

In the event of Japan's rocky relations with China worsening though, the recovery could take longer, according to economists.
A spat over a group of islands in the East China Sea that both nations claim has prompted some Chinese consumers to boycott Japanese brands that might hurt China's exports to its neighbour.

China's exports were up 11.6 % from a year earlier, according to the Beijing-based customs administration. Imports were up 2.4 %, the same pace as the previous month. The trade surplus was up at $ 32 bn, the biggest in almost four years.
In Europe, bailout prospects for Greece continued to remain uncertain even after the debt-stricken country won a parliamentary approval for the 2013 budget law.

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