After Earthquake, Japan Faces Recession

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japan-recession-5559725AFTER THE mass destructive earthquake and tsunami, Japan now facing a severe economic recession which took down the economic growth to a low level of 3.7% annualized rate in the January-March period.In the aftermath of the earthquake, the country’s production lines were crippled and it faced a debilitating energy shortage, in part because of the subsequent shutdown at the Fukushima Daiichi nuclear plant. Economists project that Japan’s economy will shrink again in the current quarter, which ends in June, as production continues to falter and weigh on industrial output and exports.

The March quake and tsunami hit the country’s relatively rural northeastern areas, destroying factories and power stations in the region, but its impact was felt nationwide as critical supply chains were paralyzed.

The disaster hit an economy already weakened by years of deflation and depressed consumer spending, which made it reliant on exports for growth. Japan’s economy shrank for four straight quarters during the global financial crisis.

BBC report …

Japan, the world’s third largest economy, contracted sharply in the first three months of the year, after a tsunami and earthquake caused devastation in March.Gross domestic product (GDP) shrank 0.9% in the first quarter, the Cabinet office said. That meant the annualised rate of contraction is 3.7%.

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Wall Street Journal Report …

Japan’s economy contracted at a much-worse-than-expected 3.7% annualized rate in the January-March period, tipping the country into a recession as the March 11 earthquake and tsunami caused declines in consumer spending, business investment and private-sector inventories.But the economy minister said the economy is likely to grow for the fiscal year on the back of reconstruction demand and added that there was no need now to come up with additional spending measures.”I expect GDP to grow close to 1% in the current fiscal year,” Economic and Fiscal Policy Minister Kaoru Yosano said after the release of gross domestic product data. The current fiscal year runs until March 2012.

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New York Times Report …

Japan’s economy shrank at an annual rate of 3.7 percent in the first quarter, tipping the country into a recession, as the earthquake and tsunami on March 11 disrupted production and prompted consumers to cut back on spending.The drop off was worse than economists had expected. In a survey of 23 economists, Bloomberg News had projected an average drop of 1.9 percent. It also marked Japan’s second straight quarter of economic contraction, leading the country into its second recession in less than three years.

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