Japan’s GDP May Shrink 6.5% This Quarter, Bank of America Says
Japan’s economy may shrink at an annual 6.5 percent pace this quarter, Bank of America Corp. said after reports last week showed industrial production and exports posted the biggest declines on record.
Gross domestic product in the three months ending Dec. 31 will decline more than the 2.7 percent previously predicted, said Tomoko Fujii, head of Japan economics and strategy at Bank of America in Tokyo.
Companies from Toyota Motor Corp. to Sony Corp. idled plants and fired workers this quarter as recessions in the U.S. and Europe caused sales of cars and televisions to collapse. The global slump is spreading to developing markets including Asia, the destination for about half of Japanese exports.
“External demand has vanished all of a sudden,” said Fujii. “Almost every industrialized nation is in a recession. Even in China, growth is slowing sharply.”
A 6.5 percent annualized contraction would be the steepest since the first quarter of 1998, when the Asian financial crisis and a sales-tax increase led to a 7.5 percent decline. The world’s second-largest economy shrank in each of the past two quarters, entering the first recession since 2001 no teletrak payday loan.
Factory output plunged 8.1 percent in November from October, the most since comparable data were first kept 55 years ago. Exports slid an unprecedented 26.7 percent from a year earlier.
Consumers at home are unlikely to pick up the slack. Household confidence is at a record low and the government has indicated it doesn’t plan to add to two stimulus packages it has yet to implement.
“Japan needs further economic measures as demand from abroad is totally lacking and will probably decline further in the first quarter,” Fujii said.
Finance Minister Shoichi Nakagawa told the Financial Times that the government has no immediate plans to draft another stimulus, saying its priority is to carry out measures announced since October. The plans, which include spending about 10 trillion yen ($110 billion) on employment and aid for households, still await parliamentary approval.