Japan's longest sustained economic expansion since World War 2 appears to have ended, according to a government report, amid growing fears of a recession in Asia's largest economy.
Japan's longest sustained economic expansion since World War II appears to have ended, a government report said Thursday, amid growing fears of a recession in Asia's largest economy.
"The economy is weakening recently," the government said, dropping the word "recovery" from its assessment for the first time in four years and eight months.
"Depending on developments in the US economy, global stock and currency markets, as well as oil prices, the economy has a risk of weakening further," the report added.
"It is possible that the economy may already be in a recession," a Cabinet Office official told reporters.
"Employment and income growth are in a weak phase. Since prices are rising and consumer confidence is worsening, a pickup in personal spending is unlikely for the time being," the official said.
Japan's economy has enjoyed a gradual recovery in recent years from recession in the 1990s, but is now being pressured by a worsening global economic climate and soaring commodity costs.
Analysts expect gross domestic product figures due next week to show Asia's largest economy contracted in the second quarter of 2008. The technical definition of a recession is two consecutive quarters of negative growth.
According to Hiroshi Watanabe, economist at the Daiwa Institute of Research, Japan appears to have entered a mild recession late last year and whether it will sink deeper will depend on the performance of the US economy.
"The chances are that the US economic slump, which is at slow pace at the moment, will enter a full swing late this year and into next year, pulling down the Japanese economy with it," he warned.
Earlier in the day the government reported that core machinery orders dropped 2.6 percent in June from the previous month, declining for a third straight month.
Prime Minister Yasuo Fukuda last week brought in a new top economic team to tackle slowing economic growth and rising oil prices, tasking them with drawing up a package of measures to shore up the economy.
Date created : 2008-08-07