HIGHLIGHTS: Crisis sends Japan into first recession in 7 years
TOKYO (Reuters) - Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports.
The world's second-largest economy shrank 0.1 percent in July-September after a revised 0.9 percent decrease, logging the second straight quarter of contraction to meet the commonly used definition of recession.
Following are key points on the preliminary third-quarter gross domestic product from a briefing by a Cabinet Office official, and remarks by Economics Minister Kaoru Yosano after the release of the data:
- It was the first time that Japanese GDP shrank for more than a quarter since a three-quarter run until December 2001, when the global IT bubble burst. The economy has never contracted more than three quarters.
- The 0.1 percent fall in GDP came after a revised 0.9 percent drop in the second quarter, which was the biggest fall since a 1.1 percent decrease in July-September 2001.
- Private consumption, which accounts for some 55 percent of GDP, rose 0.3 percent following a 0.6 percent fall in the second quarter.
- Corporate capital spending fell 1.7 percent in July-September from the previous quarter, marking the biggest drop in more than a year and declining for the third straight quarter.
- Exports rose 0.7 percent in the third quarter from the previous three months after posting a fall of 2.6 percent in April-June, which was the biggest fall in more than seven years. Exports of metal products, non-ferrous metal and oil products rose, the Cabinet Office official said.
- Imports surged 1.9 percent in the third quarter from the previous three month, the biggest increase in three years, as those of oil and non-ferrous products rose.
- Gross domestic income (GDI), which adds income received from other countries such as interest and dividends, but deducts payments made to other countries such as the Middle East, fell 0.6 percent in the July-September quarter from the previous quarter following a 1.5 percent fall in April-June.
- The difference between the GDP and GDI shows the magnitude of transfer of income to resource-rich nations from Japan - the main cause of economic slowdown earlier this year.
- The GDP deflator -- the most broadly defined inflation gauge -- fell 1.6 percent in the third quarter from a year earlier, matching the decline in the previous quarter. It was the 42nd straight quarterly decline.
- The domestic demand deflator, which shows price trends inside Japan, rose 1.3 percent from a year earlier, the biggest increase since April-June 1997 when it logged an annual rise of 1.4 percent.
- The Japanese government uses its own definition of recession, calling it the period between the peak and trough of the economic cycle. Government officials have already said that by this measure the economy is probably in recession.
"As I have said and as the GDP data shows, Japan's economy is in recession. As for the outlook, the downtrend in the economy will continue for the time being as global growth slows.
"We need to bear in mind that economic conditions could worsen further as the U.S. and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings ...
"As data shows, China's economy seems to be slowing. We are seeing clear signs that the global financial crisis is also affecting the BRIC economies. As the IMF forecasts, global economic growth is expected to turn negative and Japan is no exception ...
"As for domestic demand, Japanese companies are taking a step back in terms of capital spending. As for external demand, we can't expect much from the U.S., Chinese, European and Southeast Asian economies.
"We've seen the July-September GDP figures, and we can easily imagine that economic conditions have worsened further from September onward."
- For a graphic, click:
(Reporting by Yasuhiko Seki, Leika Kihara)