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Japan slips back into recession

Published: December 10, 2012 | 8:19 am
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Japan slipped back into recession in the third quarter, as financial turmoil in Europe, an export-denting strong yen and a diplomatic row with China doused hopes it had cemented a recovery after last year’s quake-tsunami disaster.

The revised figures mean that the world’s third largest economy is now in technical recession – two successive quarters of negative growth.

Data from the Cabinet Office affirmed a 0.9pc contraction between July and September. Revised data from the previous quarter also showed that the economy slipped 0.03 percent, reversing preliminary figures which had pointed to 0.1pc growth.
The revised figures mean that the world’s third largest economy is now in technical recession – two successive quarters of negative growth.
The data is likely to heap pressure on the Bank of Japan for more aggressive policy action to stem a slowdown in the Japanese economy.
“We had already said Japan was in a recession. Today’s number strengthened our case,” said Tomo Kinoshita, chief economist at Nomura Securities in Tokyo.
However, the government urged caution on interpreting the figures.

Separate data released Monday showed Japan’s current account surplus was down about 30pc on-year to 376.9 billion yen in October.
The current account is the broadest measure of Japan’s trade with the rest of the world, including exports, tourism and overseas income.
Japan’s current account surpluses have been hit by a slowing global economy and a spike in fuel imports due to the shutdown of most of the country’s nuclear reactors following the 2011 quake-and-tsunami sparked nuclear crisis.
Last month, Tokyo approved $10.7bn in fresh spending to help boost the limp economy, more than double a package announced in October.
The new package was announced as the nation prepares for December 16 elections which are expected to see Prime Minister Yoshihiko Noda and his Democratic Party of Japan defeated by the main opposition Liberal Democratic Party led by Shinzo Abe.
Mr Abe has vowed to spend heavily on public works and pressure the Bank of Japan into launching aggressive monetary easing measures to boost growth if his party wins the election.
The BoJ has unveiled policy easing measures in recent months as its counterparts in the US and Europe launched major moves to counter slowing growth.


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