By Qi Wei
TOKYO, May 20 (Xinhua) -- Following the fastest decline of 12.7 percent in about 35 years for the previous quarter, the cabinet office on Wednesday reported the steepest-ever fall of 15.2 percent for Japan's economy in the first three months of 2009.
In the January-March period, Japan's GDP declined for four quarters in a row for the first time in history. Domestic demand sent GDP down 2.6 percentage points from the previous three months, while demand from overseas dragged it down 1.4 points, the office said.
Consumer spending, which accounts for about 55 percent of Japan's GDP, shrank a real 1.1 percent quarter-on-quarter as an increasing number of consumers hesitated to dine out, travel and buy luxuries while corporate capital spending, a main driver of Japan's six-year economic recovery since 2002, fell at a record pace of 10.4 percent in real terms as many Japanese companies attempted to minimize their losses rather than seize future business opportunities.
Meanwhile, exports and imports also witnessed record declines, down by 26.0 percent and 15.0 percent respectively.
In fiscal 2008 ending March 31, GDP saw the first yearly decline in seven years, down by a record 3.5 percent in real terms or by 3.7 percent in nominal terms.
The figures gloomily indicated the world's second largest economy has been dragged at a faster pace into the dire economic straits under the pressure of sluggish external and domestic demand against the backdrop of the global recession.
¡¡¡¡GLIMMER OF HOPE ON THE HORIZON?
In light of the aggressive measures, including massive cuts in inventories in particular, taken by Japanese firms to tide over the difficult period, economists said they are anticipating the worst may be over for the largest economy in Asia as the companies are now better prepared to rapidly boost production once demand turns up.
And a huge package of stimulus measures adopted by the government will likely, to some extent, help the economy recover in the coming months, observers said.
However, the harsh employment as well as the sluggish consumer spending in its consequence, is sure to stand in the way to Japan's economic recovery, they argued.
Adopting similar stances, Finance Minister Kaoru Yosano warned that Japan's economy is still faced with grave downside risks despite some recent signs of improvement in industrial output and exports.
In a statement, Yosano said that as problems in such areas as the job market are still there, Japan's economy is under pressure for further deterioration.
Also referring to the unstable labor conditions as one of economic downside risks, Chief Cabinet Secretary Takeo Kawamura voiced concerns that Japan needs to brace for the further worsening economic situation.
"The (GDP) data are a reflection of the current harsh economic situation," said the top government spokesman, but an early recovery can still be expected if the government's stimulus steps are steadily and quickly implemented.
Takahide Kiuchi, chief economist at Nomura Securities Co., was more upbeat about Japan's economic outlook.
"It is highly likely that economic growth hit bottom in the January-March period," he was quoted by Kyodo News as saying.
Kiuchi projected that the economy will recover at somewhere in the upper half of plus 3 percent in the April-June quarter.
The upturn may run out of steam around the end of 2009 after positive effects from the stimulus steps and corporate restructuring measures faded away, estimated the economist.
Prime Minister Taro Aso also believed that the positive effects of the government's economic stimulus measures are "starting to emerge."
Admitting the economy is in a severe situation, Aso said that the government needs to "take appropriate actions."
Japan's economy contracts 15.2% in Q1
TOKYO, May 20 (Xinhua) -- Japan's gross domestic product (GDP) shrank at an annual pace of 15.2 percent in real terms in the first three months of 2009 due to sluggish external and domestic demand amid the global recession, the Cabinet Office said in a preliminary report Wednesday.
It was the steepest fall in Japan's economy since record began in 1955, said the office, adding that the economy declined for four quarters in a row for the first time in history. Full story
