Japan’s economy hit by more bad news as business sentiment at record low

| April 1, 2009 | 0 Comments
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The latest Bank of Japan’s quarterly Tankan survey has revealed that business confidence among major manufacturers in Japan has hit the lowest level ever.

The survey of 10,000 companies, which is seen as a key indicator of the health of the country’s economy, revealed that confidence has plummeted to a 35-year low.

The world’s second largest economy has been hit by a raft of bad news of late after the statistics bureau in Tokyo announced yesterday that the unemployment rate has risen to a 3-year high of 4.4%, up from 4.1% in January.

Also this week, figures from the Ministry of Economy, Trade and Industry revealed that manufacturing output in Japan had fallen for five consecutive months.

Separate figures, also released yesterday, from the Japan Automobile Manufacturers Association revealed that car production fell 56.2% in February to 481,396 vehicles - also the fifth consecutive monthly decline.

In the meantime, household spending is down by 3.5% in February compared to the previous year - this was the 12th monthly decline. Purchases by consumers make up for more than 50% of the economy.

The export-dependent economy, which was once seen as relatively unscathed by the global financial crisis, is being hit by a slump in demand for its products overseas. Many economists believe the economy is heading for the deepest recession since the World War II after it recently suffered its worst ever decline in 35 years. On an annual basis, the economy shrank at a rate of 12.7%.

In response to the country‘s difficulties, the Government is expected to announce a new stimulus package worth up to 20 trillion yen (£140 billion), in an attempt to drag the country out of recession

This would be in addition to the two stimulus packages since last year but it appears that recent measures have yet to restore any optimism among businesses and individuals.

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