Open

Coming up

Don't miss

Replay


LATEST SHOWS

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

IN THE PAPERS

Canada and Russia exchange snarky tweets

Read more

AFRICA NEWS

Ebola in Nigeria: First death outside of Lagos

Read more

AFRICA NEWS

Niger: Top opposition figure to be questioned in baby-trafficking scandal

Read more

AFRICA NEWS

Liberia: President dismisses top officials who ignored call to return home

Read more

BUSINESS DAILY

Google rivals Amazon with delivery drone tests

Read more

DEBATE

How to Stop Ebola: WHO Says Cases Could Exceed 20,000 (part 2)

Read more

DEBATE

How to Stop Ebola: WHO Says Cases Could Exceed 20,000

Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Ukraine to restart NATO membership bid

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • Obama has 'no strategy yet' on potential Syria strikes

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • Syrian refugees surpass 3 million, UN says

    Read more

  • West backs Ukrainian claims of Russian incursion

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more

  • Pakistan army to mediate between PM, protesters

    Read more

  • PSG face Barcelona, Ajax in tough Champions League draw

    Read more

  • In pictures: Billions of locusts invade Madagascan capital

    Read more

  • Brad Pitt and Angelina Jolie say ‘I do’ in France

    Read more

  • Erdogan sworn in as Turkey's president

    Read more

  • Assad cannot be partner in fight against terrorism, says Hollande

    Read more

Asia-pacific Asia-pacific

Japan's recession is worse than feared

Latest update : 2008-12-09

Japan's recession is worse than expected, according to revised figures published on Tuesday. The GDP of the world's second-largest economy contracted by 0.5% in the third quarter and not 0.1% as initial estimates suggested.

AFP - Japan sank much deeper into recession than previously thought in the third quarter as firms slashed investment to cope with the financial crisis, official figures showed Tuesday.

Underscoring the rapidly worsening situation, Sony Corp. said it was cutting 8,000 jobs, axing about 10 percent of its global manufacturing sites and exiting unprofitable businesses to cope with the economic downturn.

Japan's economy shrank 0.5 percent in the three months to September -- 1.8 percent on an annualised basis -- entering its first recession in seven years with a second straight quarter of negative growth, the government said.

The gloomy snapshot of Asia's largest economy raised fears that the downturn will be deeper and longer than previously expected, which analysts said could prompt the central bank to cut interest rates again to almost zero.

An initial estimate last month had shown the Japanese economy shrank 0.1 percent in the third quarter, and 0.4 percent on an annualised basis.

"The data suggests that the economy is contracting faster than previously thought, and the depth of the recession will be more severe," said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong.

"We still haven't really seen the damage to the economy in the fourth quarter. Japan is coming from a much weaker footing than previously thought," he said, predicting the recession will last until mid-2009.

Weak business investment was the main culprit for the revision as companies slashed spending on new equipment and factories by 2.0 percent, compared with an initial estimate of 1.7 percent.

Sony, seen as a bellwether of corporate Japan, said Tuesday that it would cut investment in its electronics business by about 30 percent and lay off about five percent of its 160,000 workers in its global electronics business.

Japan's export-dependent economy was also hit by sluggish overseas shipments as the global financial crisis hit international trade.

The latest snapshot of the Japanese economy was even worse than analyst forecasts for a contraction of about 0.2 percent quarter-on-quarter.

The government said the economy shrank a revised 1.0 percent in the second quarter, which was also slightly worse than previously thought.

Japan has relied on brisk exports of cars, electronics and other goods to drive its recovery from recession in the 1990s.

But it has seen exports weaken in recent months due to worsening demand in recession-hit overseas economies.

"Companies are facing a profit squeeze and there is pessimism about future demand so they will have to cut business investment in the coming quarters," said Tomoko Fujii, head of economics and strategy at Bank of America.

The grim figures raised expectations that Japan's central bank may reduce borrowing costs again to spur economic growth.

The Bank of Japan in October cut interest rates for the first time in seven years, by 20 basis points to 0.3 percent, as part of efforts to calm volatile markets and boost the recession-hit economy.

Japan's central bank is likely to cut interest rates again, probably in February by 20 basis points to just 0.1 percent, Fujii predicted.

Date created : 2008-12-09

COMMENT(S)