Japan’s industrial output in record fall

| January 30, 2009 | 0 Comments

The depth of the slowdown has emerged today in the world’s second largest economy after official figures from the Trade Ministry revealed that industrial output plunged by 9.6% last month.

The fall represents the largest ever since records began in 1953 and much worse than the 9% expected by analysts.

Economics Minister, Kaoru Yosano, said that the fall is likely to continue.

Meanwhile, the economy experienced more bad news with unemployment rising last month to 4.4% - the highest level in three years.

In the third quarter of last year, Japan entered its first recession since 2001. The country has been hit by falling exports as global demand for its products has slumped.

Prime Minister Taro Aso has announced that he will take ‘bold steps’ to make certain that the country is the first to recover from the crisis, which is gripping economies worldwide.

Furthermore, there is a growing possibility of deflation after official figures revealed a sharp fall in the rate of inflation. Core consumer inflation fell from 1% in November to 0.2% in. December.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

The bad news led to a fall in the Nikkei 225 index, which closed down 3% to 7,994.

The country’s major companies are feeling the pressure after Toshiba forecast record annual losses yesterday, while Toyota said it might be heading towards an operating loss - the first for over seven decades.

Sony is also expecting record losses this year, while Honda, Japan’s second-largest carmaker is to shut down its UK plant in Swindon for four months after today’s work is complete. The move is set to affect more than 3,000 of the 4,000 employees and is believed to be one of the longest in Britain’s recent industrial history.

Finally, it has today been revealed that Japanese electronics and engineering group, Hitachi is to reduce its headcount by 7,000, in a bid to cut costs as the company has been hit by a huge fall in global sales.

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