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Tuesday 13th of July 2010
January 15, 2009    

Fall in Japanese machinery orders

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by Kay Murchie

Core Japanese machinery orders fell 16% in November to a 20-year low sending the Nikkei stock market index down 5%.

In addition, Hong Kong’s Hang Seng Index lost 3.4%, while South Korea’s Kospi fell 6%.

Machinery orders in the world‘s second largest economy are considered a barometer for corporate and consumer strength across the world.

Meanwhile, wholesale inflation fell, highlighting the risk of deflation. A long period of deflation could be a serious threat to an economy because it deters consumers and businesses from spending in expectation of falling prices.

In the meantime, industrial output in Japan also fell 8% in November compared to the previous month - the largest fall ever.

It was announced that the Japanese economy officially entered recession at the end of last year as the country has been hit by weakening exports and falling corporate investment.

In related news, it has been reported that Europe’s largest economy Germany grew by just 1.3% last year as it was hit by a fall in exports. Germany also officially entered a recession late last year after two consecutive quarters of negative growth.

Chancellor Angela Merkel has announced an economic stimulus package worth €50 billion (£45 billion) in a bid to kick-start the economy.

The package includes investments in infrastructure, as well as tax cuts.

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