Slower exports, consumption push Japanese economy in recession
The Japanese economy once again slipped into recession as official figures show three successive quarters of negative growth. Japan's Cabinet Office said that compared with the previous quarter, the economy contracted 0.1% in the final quarter of 2004. The annual final quarter GDP (Gross Domestic Product) dropped 0.5%, disappointing analysts who had forecasted a slight rise in the final quarter. The decline reflects weak exports and a slowdown in consumer spending. Net exports and consumer spending each contributed a negative 0.2 percentage points to the GDP. The Japanese government revised the July-September figures downwards to 0.3% contraction from the previous estimate of 0.1% growth. The economy also recorded a 0.2% decline in the second quarter. After two consecutive quarters of economic contraction, economists accepted that Japan had entered it fourth recession in a decade; however, officials refused to agree with the economists' assessment. The three quarters' downturn is the highest level since the Japanese economy contracted four consecutive quarters, from April-June 2001 to January-March 2002. For 2004 as a whole, however, the economy rose 2.6%. That figure represents the highest growth rate since 1996, when it soared 3.4%. Japan's Prime Minister insists that the economic recovery is continuing. The Economy Minister points out that the economy is experiencing a minor slowdown, but that the bigger picture indicates the economy is indeed recovering. Cabinet Office officials say that they have to analyze other economic indicators before deciding whether the economy is actually in recession. Separately, the Japanese Yen fell against the US Dollar, following the release of the GDP figure. The Bank of Japan may sell Yen for the first time since March 2004 in order to prevent further depreciation of the Yen.