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Tuesday 17th of February 2009
February 16, 2009

Japan’s economy in worst performance since 1974


by Kay Murchie
Japan's economy in worst performance since 1974

The world’s second largest economy has suffered its worst ever decline in 35 years the Cabinet Office said in Tokyo today.

In the period October to December, Gross Domestic Product (GDP) fell 3.3% - the third consecutive quarter in which GDP declined.

In comparison, the euro zone suffered a 1.5% decline while the US, which is the world’s largest economy, suffered a 1% fall, meaning the slowdown in Japan is much steeper than that of its counterparts.

On an annual basis, Japan’s economy shrank at a rate of 12.7% - more than 1% worse than average market expectations.

According to Economic Minister, Kaoru Yosano, Japan is facing its worst economic crisis since the end of the Second World War.

Mr Yosano said new stimulus measures are being considered to boost the economy and said “it is our responsibility to rebuild the domestic economy for other countries.”

The Japanese economy is heavily dependent on exports of cars, machinery, and IT equipment, and the country has been hit hard by the slump in global demand for its products.

In the last two weeks alone, job losses have been rife in the country after electronics company Pioneer Corp. announced it is to axe 10,000 jobs worldwide. Panasonic, announced it is to slash 15,000 jobs worldwide, while Japanese electronics giant NEC is planning to reduce headcount by 20,000.

Hitachi is also to reduce its headcount by 7,000, while last month, Samsung Electronics, which is the world’s largest maker of LCD panels and televisions, posted its first ever quarterly loss.

Japanese carmaker Nissan is set to make 20,000 job cuts worldwide over the next 12 months, while Honda, Japan’s second-largest carmaker, has shut down its UK plant in Swindon for four months. Japanese carmaker Mazda announced it is to axe over 500 more jobs in Japan.

Japan is in its first recession since 2001 and many firms have been hit by a strong yen and falling sales amid the global economic downturn.

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