This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/2012/feb/13/japan-economy-shrank-fourth-quarter

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Japan's economy shrank in fourth quarter Japanese economy shrank in fourth quarter
(about 1 hour later)
Japan's economy shrank 2.3% in the fourth quarter as manufacturers were battered by the strong yen, weak export demand amid the European debt crisis and flooding in Thailand. Japan's economy shrank 2.3% in the fourth quarter as manufacturers were hit by the strong yen, weak export demand amid the European debt crisis, and flooding in Thailand.
A drop in public investment during the quarter, due largely to political bickering delaying parliamentary approval for a ¥12tn (£97bn) extra budget for tsunami reconstruction, also contributed to the year-on-year decline. A drop in public investment during the quarter – due largely to political bickering delaying parliamentary approval for a 12tn yen (£97bn) extra budget for tsunami reconstruction – also contributed to the year-on-year decline.
The world's third-largest economy should get a boost once that rebuilding money kicks in, but the outlook for the country's vital exporters remains unclear, said Masayuki Kichikawa, chief Japan economist at Bank of America Merrill Lynch. The world's third-largest economy should get a boost once the rebuilding money kicks in, but the outlook for Japan's vital exporters remains unclear, Masayuki Kichikawa, the chief Japan economist at Bank of America Merrill Lynch, said.
"This should be viewed as temporary setback," Kichikawa said. "To what extent will the European crisis continue to affect overseas demand – that is the big question." "This should be viewed as temporary setback," Kichikawa added. "To what extent will the European crisis continue to affect overseas demand? That is the big question."
Japan's major manufacturers, such as Sony to Honda, were hit badly during the fourth quarter by a drop in export demand and flooding in Thailand, a regional factory and supply base, which disrupted their production. Japan's major manufacturers, such as Sony and Honda, were hit badly during the fourth quarter by a drop in export demand and the flooding in Thailand, a regional factory and supply base, which disrupted production. Those problems arose just as many exporters appeared to have recovered from the 11 March earthquake and tsunami.
Those problems arose just as many exporters appeared to have recovered from the 11 March earthquake and tsunami, which interrupted their manufacturing at home. Last month, Japan reported its first trade deficit since 1980, reflecting broader changes in its economy as manufacturers shift production overseas to escape the strong yen and be closer to their markets. However, the Thai flooding underlined that basing production overseas also has risks.
Japan last month reported its first trade deficit since 1980, reflecting broader changes in its economy as manufacturers shift production overseas to escape the strong yen and be closer to their markets. But the Thai flooding underlined that basing production overseas also has risks. The drop in gross domestic product was worse than expected. Economists polled by the Kyodo News agency projected a 1.4% decline.
The drop in gross domestic product was worse than expected. Economists polled by Kyodo News agency projected a 1.4% decline. Compared with the previous quarter, October-December GDP fell 0.6%, the Cabinet Office said. That came after a 1.7% increase in the July-September quarter, reflecting some recovery following the tsunami.
Compared with the previous quarter, October-December GDP fell 0.6%, the Cabinet Office said. That comes after 1.7% increase in the July-September quarter, reflecting some recovery after the tsunami disaster. Domestic private consumption, which accounts for over half the economy, edged up 0.3% from the previous quarter, the data showed. Corporate capital investment rose 1.9%, while private housing investment fell 0.8% and public investment declined 2.5%.
Domestic private consumption, which accounts for over half the economy, edged up 0.3% from the previous quarter, the data showed. "The growth rate will turn positive and stay positive this year because reconstruction demand will continue to push up GDP," Kichikawa said. "But the pace of growth will depend on whether the decline in exports will stabilise."
Corporate capital investment rose 1.9%, while private housing investment fell 0.8% and public investment declined 2.5%. The economy and fiscal policy minister, Motohisa Furukawa, said in a statement that exports and production increased in December in a "rebound to the impact of flooding in Thailand".
Along the tsunami-battered coast, most of the debris has been cleared away, but rebuilding has yet to begin in many towns and communities as local leaders finalize reconstruction plans. Reconstruction is expected to stimulate economic growth, although export demand still appears weak. "If we take into account these factors and look at the overall economic situation, we can say that upward movement is continuing," he said. Furukawa also said the US economy is moderately recovering and global business sentiment is improving.
"The growth rate will turn positive and stay positive this year because reconstruction demand will continue to push up GDP," said Kichikawa. "But the pace of growth will depend on whether the decline in exports will stabilize."
Economy and fiscal policy minister Motohisa Furukawa said in a statement that exports and production increased in December in a "rebound to the impact of flooding in Thailand".
"If we take into account these factors and look at the overall economic situation, we can say that upward movement is continuing," he said.
Furukawa also said that the US economy is moderately recovering and global business sentiment is improving.
"We expect steady increase of exports amid moderate improvement of the global economy," he said. "However, we need to be fully aware of the downside risk.""We expect steady increase of exports amid moderate improvement of the global economy," he said. "However, we need to be fully aware of the downside risk."
For all of 2011, Japan's economy contracted 0.9% from 2010, when GDP grew a robust 4.4%. In 2009, the economy shrank 5.5% in the wake of the global financial crisis. For all of 2011, Japan's economy contracted 0.9% from 2010, when GDP grew by a robust 4.4%. In 2009, the economy shrank 5.5% in the wake of the global financial crisis.