Japan leaves interest rates unchanged

| February 19, 2009
”Japan

The Bank of Japan has opted to keep interest rates at 0.1%.

Japan‘s economy, which is the world’s second largest, is in its first recession since 2001 and many of its major companies have been hit by the slump in global demand for its products and a strong yen.

The Central Bank said economic conditions have deteriorated significantly and are likely to continue deteriorating for the time being.

Earlier this week, economic Minister, Kaoru Yosano, said Japan is facing its worst economic crisis since the end of the Second World War, after the Cabinet Office revealed that the country had suffered its worst ever decline in 35 years.

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.

Meanwhile, the Central Bank has announced a series of measures to revive its economy such as boosting corporate financing. Banks are still reluctant to lend, while companies are finding it increasingly difficult to raise money.

This month, job losses have been rife in the country with Pioneer Corp., Panasonic, NEC, Hitachi, Nissan, Honda and Mazda all announcing their intention to reduce headcount significantly.

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