New Japan recession bodes ill for Noda
Japan has entered its fifth recession in 15 years just days before the December 16 election, which is expected to sweep the Democratic Party of Japan and Prime Minister Yoshihiko Noda from power.
Shinzo Abe, leader of the opposition Liberal Democratic party, has attacked the DPJ and the central bank for failing to stir demand in an economy that has shrunk in three of the past four years, while calling for further fiscal stimulus and “unlimited” monetary easing.
Government data yesterday showed that Japan’s gross domestic product shrank an annualized 3.5 per cent in the three months to September, as the country joined Italy and Spain in recession. The government also revised down its GDP estimate for the quarter, saying the economy shrank an annualized 0.1 per cent.
Even with fiscal and monetary support, the economy may continue to struggle amid uncertainty over external demand, limited wage rises and a tight labour market.
Separate government data showed household confidence fell to an 11-month low. “We expect Japan’s economy will continue to lack strength due to weak exports and stagnating domestic demand,” said Takeshi Yamaguchi, economist at Morgan Stanley MUFG Securities.
While Japanese economic data are often substantially revised months after release, the latest revision highlights the difficulty of achieving sustained growth after the 2008 global financial crisis and the earthquake and tsunami in March 2011.
Mr Abe, who has made reviving the economy a centerpiece of his campaign, argues that more aggressive monetary policy and a hefty increase in debt-funded infrastructure spending would put an end to the mild deflation that many economists say has hobbled Japanese growth since the 1990s.
Mr Noda has portrayed such proposals as a potentially dangerous assault on central bank independence and a return to the wasteful construction policies that have helped saddle the state with gross debt of more than twice GDP.
From: http://www.ftchinese.com
Update: 2012-12-11 07:12 am