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Saturday 23rd of May 2009
May 22, 2009

Japan revises economic outlook upwards


by Kay Murchie
”Japan

The Bank of Japan has announced renewed optimism and said that the worst of the recession might be over and has revised its economic outlook upwards.

The outlook comes after the bank announced it had retained interest rates at the 0.1% level.

Interest rates were cut by 20 basis points in December last year and have been on hold ever since.

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. During the first three months of 2009, Japanese exports plummeted by 26%.

However, the bank said exports and production are beginning to level out and looking ahead, exports and production are expected to begin a recovery but domestic demand is expected to remain low.

Earlier this week, it was announced that the Japanese economy, which is the world’s second largest, contracted 4% during the first quarter of 2009 - its worst quarterly performance since records began in 1955.

The fall in GDP was more than double the 1.6% reported for the US and worse than the 2.5% reported for Europe.

Meanwhile, on an annualised basis, Japan’s economy shrank by 15.2%, according to figures from the Cabinet Office.

However, the latest revision in its outlook is more optimistic than last month’s forecast by the bank, when it said economic conditions had “deteriorated significantly”.

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