Japan in Recession Again?!! But how?

[cyberdoc95]

[SIZE=3]Japan Falls Into Recession as 4th-Qtr GDP Shrinks (Update10)[/SIZE]

Feb. 16 (Bloomberg) -- Japan's economy unexpectedly fell into recession last year for the fourth time in 13 years as consumer spending declined and exports faltered. The yen weakened.

Gross domestic product contracted at an annual 0.5 percent pace in the quarter to Dec. 31, the Cabinet Office said in a report in Tokyo today. The median forecast of 27 economists surveyed by Bloomberg News was for 0.7 percent growth. Revised figures showed the economy shrank for three straight quarters.

Higher taxes and falling wages may further damp consumer spending, leaving the 503 trillion yen ($4.8 trillion) economy dependent on exports to China and the U.S. for growth. Finance Minister Sadakazu Tanigaki said the contraction won't change plans for spending cuts and tax increases to curb the world's largest public debt.

``What Japan's economy ultimately needs to achieve stable growth is consumer spending,'' said Naoki Iizuka, chief economist at Dai-Ichi Life Research Institute, who predicted the contraction. ``A premature policy change, such as raising taxes, could cause the economy to falter.''

The report of a Japanese recession comes a day after Germany, the world's third-largest economy, reported a surprise decline in GDP in the fourth quarter and Italy also posted a contraction, dragging down the pace of growth in the 12 nations sharing the euro to half what economists expected.

[SIZE=3]Yen Declines[/SIZE]
The yen fell to 105.13 to the dollar at 10:42 a.m. in London from 104.41 late yesterday in New York. Benchmark 10-year Japanese government bonds rose, pushing the yield down 3.5 basis points to 1.415 percent. A basis point is 0.01 percentage point. The Nikkei 225 Stock Average fell 0.4 percent to 11,601.68 at the 3 p.m. close of trading.

The economy grew 2.6 percent in real terms in 2004, the fastest pace since 1996, lagging the 4.4 percent expansion in the U.S. and China's 9.5 percent growth.

As with previous recoveries since Japan's bubble economy burst a decade ago, a surge in consumer spending failed to gain momentum. After growing at a 5.8 percent pace in the first quarter, the economy shrank 0.8 percent in the second quarter and 1.1 percent in the third.

``The report forced some investors to acknowledge that Japan's economy is in a recession and not just a slowdown,'' said Satoshi Yamada, who helps oversee the equivalent of about $4.2 billion in Tokyo at Japan Investment Trust Management Co.

[SIZE=3]`Moderate' Recovery[/SIZE]
Tanigaki said the technical definition of a recession, two consecutive periods of quarter-on-quarter contraction, doesn't apply to Japan. Like the U.S., Japan has a committee that marks recessions using criteria other than GDP growth alone.

``We haven't changed our assessment that the economy is still on a moderate pace of recovery,'' Prime Minister Junichiro Koizumi told reporters.

A government report last week showing machinery orders rose 6 percent in the fourth quarter revived optimism that exporters will increase investment in anticipation of higher sales.

``The chip industry has gone into an adjustment period and that phase will probably see bottom sometime this summer,'' Terry Higashi, chairman of Tokyo Electron Ltd., the world's No. 2 maker of chip-making equipment, said in a Feb. 14 interview.

[SIZE=3]Chip Glut[/SIZE]
Export growth of 1.3 percent was outpaced by a 3.1 percent increase in imports in the fourth quarter. Net exports, or the difference between exports and imports, subtracted 0.2 percentage point from growth.

A worldwide glut of computer chips used to build mobile phones and personal computers has taken a toll on earnings and sales of Japanese exporters.

Hoya Corp., the world's largest supplier of glass plates used in products such as Apple Computer Inc.'s iPod portable music player, said profit growth slowed in the three months ended Dec. 31 and may slump further this quarter.

Sony Corp., the world's second-largest consumer electronics maker, on Jan. 20 slashed its operating profit forecast by 31 percent to 110 billion yen, citing falling prices of digital products including flat-screen televisions and DVD recorders.

Capital spending rose 0.7 percent from the previous quarter, today's report showed, less than the 1.3 percent increase forecast by economists.

[SIZE=3]Consumer Decline[/SIZE]
Consumer spending fell 0.3 percent. The decline reduced economic growth by 0.2 percentage point in the quarter.

Spending has faltered as companies hire more part-time workers, who typically earn less and receive fewer benefits. Wages have fallen for 43 of the past 46 months and the full-time labor force contracted for the seventh straight year in 2004.

Three tropical storms in the quarter, including the biggest in more than a decade, kept shoppers at home, curbing sales at department stores. Tanigaki said in an interview today the government will push ahead with plans to phase out income tax rebates adopted in 1999, part of measures to curb public debt projected to reach 151 percent of GDP by March 2006.

Seiyu Ltd., Japan's fourth-largest retailer, yesterday reported a loss of 12.3 billion yen for the year ended Dec. 31, three times more than forecast on Oct. 29.

More than six years of deflation have taken a toll on the economy. Prices as measured by the GDP deflator fell 0.3 percent from a year earlier, less than the 1.1 percent decline predicted by economists.

[SIZE=3]Rate Meeting[/SIZE]
Bank of Japan Governor Toshihiko Fukui and his policy-making colleagues will tomorrow probably leave interest rates almost at zero, where they have been since March 2001, said all 14 economists surveyed by Bloomberg News.

Nominal GDP, which isn't adjusted for price changes, was unchanged in the fourth quarter from the previous quarter, today's report said. Nominal GDP expanded 1.4 percent last year, the first gain in four years.

Quarter-on-quarter, the economy shrank 0.1 percent in the three months to Dec. 31. Germany reported a 0.2 percent contraction for the same quarter yesterday, while Italy's GDP fell 0.3 percent. Gross domestic product contracted 0.2 percent in the second quarter and 0.3 percent in the following period, revised figures showed.

The economy would have to expand at an annualized pace of 8.9 percent this quarter to meet the government's forecast for 2.1 percent growth in the fiscal year ending March 31.

From a year earlier, the economy grew 0.6 percent in real terms in the fourth quarter.

SOURCE: CLICK HERE(BLOOMBERG.COM)

[cyberdoc95]

[SIZE=3]RECESSION - [/SIZE]A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.

SOURCE: Investorwords.com

[boydapa]

mature na ksi economy nila---capitalism will eventually end up in self destruction(something like that).

sayang yun japan, there was a point in time na kng titignan nyo halos lahat ng gamit natin (appliances, electronics, cars etc.) lahat may label "Made in Japan" ---ngayon konti nlng. japan designed ang tatak

[tagalnasaabroad]

this is the irony of japan..pano makikita ang paghihirap nitong bansa samantalang pag nagpahiram sa mga third world countries trilyones namang yen..dito nalang satin daming yen denominated na infrastructure projects nagsusulputan..aber..?

[van_wilder]

decline in GDP... pero hindi ibig sabihin wala silang revenue or pera... lumiit lang yun kita nila...

[cyberdoc95]

[SIZE=3]Switzerland dips into recession, Eurozone gloom deepens [/SIZE]
Financial Times Thursday 3rd March, 2005
SOURCE:CLICK HERE!!


The Swiss franc was the worst performing major currency on Thursday as Switzerland became the latest country to report disappointing gross domestic product in the fourth quarter of 2004.

In fact, Swiss economic output actually contracted, falling 0.1 per cent, against expectations for growth of 0.2 per cent. This was the first negative quarter since the start of 2003.

Switzerland has now followed Japan in unveiling negative GDP growth in the fourth quarter, while growth also fell sharply in Australia and the eurozone.

The data, in conjunction with recent weak numbers from the machinery sector, led Benedikt Germanier, currency strategist at UBS, to scrap his expectation for the Swiss National Bank to raise rates in March, with June now seen as more likely for the next rate hike.

Mr Germanier also revised up his one-month euro-Swiss franc forecast to SFr1.56 from SFr1.54.

The data flow “points to the fact that the recovery might be postponed by three to six months,” he said. “However growth is still close to trend and with negative real rates the rate normalisation process needs to go on.”

The Swiss franc, regarded as the ultimate “safe haven” currency, has been further hurt by a growing appetite for risk among global investors. Goldman Sachs said this week that its risk aversion index had fallen sharply in February to levels not seen since June 2000, and UBS sees a similar trend, epitomised by equities outperforming bonds.

As a result the Swissie fell 0.4 per cent to SFr1.5490 against the euro, taking its two-day losses to 0.7 per cent, 0.5 per cent to SFr1.1824 against the dollar, 0.3 per cent to SFr2.2513 versus sterling and 0.1 per cent to Y89.14 against the yen.

“Euro/Swiss franc has extended its recovery to two-week highs and we don’t see any significant downside potential at the moment,” said Astrid Schilo, currency economist at IdeaGlobal.

Sterling also slid as data revealed the UK’s key service sector may not be in quite such good shape as many had expected.

The headline reading of the sector’s purchasing managers’ index dipped to 55.1 in February, from 55.9 in January, confounding expectations for a slight rise.

Moreover, the business expectations component of the index fell to its lowest level since June 2003 and the employment component slid to its lowest since August 2003, with a reading of 50.5, perilously close to the break-even mark of 50.

“This report supports our view that activity continues to slow in the UK, and if the Bank of England does raise rates again, the adverse impact on sentiment and growth is likely to result in rate cuts by the end of the year,” said James Knightley, economist at ING Financial Markets. With sterling strongly influenced by the level of underlying yield support, the pound dipped to £0.6875 against the euro and slipped 0.3 per cent to $1.9077 against the dollar.

The dollar was solid, firming 0.4 per cent to Y105.18 against the yen and 0.5 per cent to C$1.2455 against the Canadian dollar, as expectations heightened of a strong February non-farm payrolls number on Friday. The Institute of Supply Management's non-manufacturing employment index rose to 59.6 in February, the highest level since its inception in 1997.

Research by RBC Capital Markets suggested this figure was consistent with February jobs growth of 433,000. Monica Fan, global head of forex strategy at RBC, argued that the true consensus figure for the’s payrolls was around 300,000, rather than the published consensus of 225,000, meaning a 300k-plus figure would be needed to fuel a dollar rally.

The dollar made no ground against the euro, however, treading water at $1.3119, despite more gloom from the eurozone. The European Central Bank revised down its 2005 and 2006 growth forecasts on Thursday as it held rates at 2 per cent for the 21st month.

Eurozone service sector PMI also fell in February, but the single currency still managed to rise against most currencies.

[david12345]

Japan has a stagnant population. Moreover, the median age is getting older, which means that the percentage of the working population vs the retirees/dependents is getting smaller.

To attain economic growth, you need a growing work force. More work force, more consumer spending.

[pnay_fickle_minded]

lahat ng mga japanese peeps dito sinasabi nasa recession sila... pero for me, di naman masyado, i mean di ko man nararamdaman... pero sabi ng mga pinoys, compared to 10 yrs ago, umuulan ng pera ang mga hapon, ngayon medyo nagtitipid na sila... madami din overstay dito,na hindi nagbabayad ng tax

[BlueBimmer]

OT: pnayfickleminded, sig mo means goddess of love tama ba? hehehe

[pnay_fickle_minded]

OT: pnayfickleminded, sig mo means goddess of love tama ba? hehehe

yep ang galing mo..

back to topic: sabi ng manager ko, halos nagbabaan daw ng sweldo ang mga hapon, pero parang pareho lang daw...