THE TELEGRAPH: Japan's economy has suffered its worst quarterly performance since records began more than five decades ago as it continues to struggle with the economic crisis.
The world's second largest economy experienced a quarterly 4 per cent shrink in its gross domestic product (GDP) reflecting the continued impact of the recession on the export-dependent nation.
Hit hard by a global plunge in demand for cars and technology, Japan's economy shrank 15.2 per cent in the first quarter compared to last year, according to Cabinet Office figures.
The contraction eclipses that of other industrialised nations: the nation's GDP slide was more than double the 1.6 per cent recorded in the US and significantly higher than Europe's record 2.5 per cent.
A weakening in domestic demand has been the biggest contributor to Japan's decline, with consumer spending dropping 1.1 per cent and business investment plunging a record 10.4 per cent during the same period.
As companies continue to cut spending due to diminished demand, the number of underused factories and workers was continuing to grow, according to Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo.
"There is a huge problem of over capacity," he said. "That means capital spending is not likely to pick up." While the contraction is the biggest for Japan since records began in 1955, hopes have been raised that the economy will soon start to rebound following a slight surge in industrial production in March. >>> By Danielle Demetriou in Tokyo | Wednesday, May 20, 2009
