The steady drumbeat of doom continues out of Japan…
Strangled by the collapse in global export demand, Japan’s economy shrank at its fastest rate in 35 years in the fourth quarter and shows no signs of reversing course anytime soon.
Japan’s gross domestic product contracted 3.3 percent from the previous quarter, or an annual pace of 12.7 percent, in the October-December period, the government said Monday.
That was worse than expected and the steepest slide for Japan since the oil shock in 1974. It is more than triple the 3.8 percent annualized contraction in the U.S. in the same quarter.
“There is no question that this is the worst economic crisis since the end of World War II,” said Economy Minister Kaoru Yosano. “The outcome clearly shows that Japan’s export-dependent economy has been severely hit.”
Chief Cabinet Secretary Takeo Kawamura went further, calling the economic downturn a once-in-a-century calamity.
Rattled officials hinted they may soon call for more government steps to stem the widening damage but urged lawmakers to first give final approval to a $52.2 billion extra budget, which includes cash payouts to taxpayers.
Already, Toyota Motor Corp., Sony Corp. and a slew of other companies have announced deep job cuts and projected net losses for the fiscal year through March. The yen’s appreciation, which erodes income from abroad, has only intensified the pain.
The fallout has begun to penetrate families, which are spending less amid rising unemployment and withering confidence.
Japan’s economy — the world’s second-largest — has now contracted for three straight quarters and is almost certainly headed for a fourth.
The first three months of the year will likely be “another horrifying quarter,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo, who predicts GDP to contract an annualized 10 percent during the period.
The latest data underscore the vulnerability of Asia’s export-driven economies during global downturns and point toward more cuts in jobs, production and profits in the coming months. Even demand from emerging markets, which earlier had partly offset declines in North America and Europe, began falling sharply in the fourth quarter.
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