JAPAN'S economy contracted at a much-worse-than-expected 3.7 per cent annualised rate in the March quarter, tipping the country into recession as the March 11 earthquake and tsunami caused declines in consumer spending, business investment and private-sector inventories.
But the country's economy minister put on a brave face, saying that the economy is likely to grow for the fiscal year on the back of reconstruction demand, and added that there was no need now to come up with additional spending measures.
"I expect GDP to grow close to 1 per cent in the current fiscal year," Economic and Fiscal Policy Minister Kaoru Yosano said after the release of gross domestic product data today. The current fiscal year runs until March 31, 2012.
Japan's real GDP for the March quarter fell 0.9 per cent from the previous quarter, or an annualised rate of 3.7 per cent, according to figures released by the Cabinet Office. On a quarter-to-quarter basis, GDP was down a price-adjusted 0.9 per cent, down for the second consecutive quarter.
The contraction was almost double the annualised 2 per cent drop expected by economists surveyed by Dow Jones Newswires. GDP, or the total value of goods and services produced by the nation, shrank a revised annualised 3 per cent in October-December.
The first quarter decline was the sharpest since a record 18.3 per cent contraction in January-March 2009, according to the data.
Two quarterly falls in GDP -- an often-used definition of a technical recession -- is also the first successive contraction since the four straight quarters of decrease from April 2008 through March 2009 amid the global financial crisis.
The data underline how the worst natural disaster to hit Japan in decades has foiled pre-quake expectations that the export-driven economy would escape a northern winter lull in the first quarter, as overseas demand improves.
A survey of 43 economists conducted before the March earthquake had produced a median forecast for an annualised growth of 1.73 per cent for the first quarter.
Wall street Journal
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http://www.theaustralian.com.au/business/news/earthquake-and-tsunami-push-japans-economy-into-recession/story-e6frg90o-1226058825050
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