Japan has long had a two-tier economy: a robust export sector and a comatose domestic economy. With the yen at a high level and trade volumes generally falling, the export sector has gone spectacularly into reverse gear, taking overall growth with it.
Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production.
Gross domestic product fell for a third straight quarter in the three months ended Dec. 31…
Exports plunged a record 13.9 percent from the third quarter as global demand for Corolla cars and Bravia televisions evaporated….
“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo….
The world’s second-largest economy shrank 3.3 percent from the third quarter, today’s report showed. That compared with the U.S.’s 1 percent contraction and the euro-zone’s 1.5 percent decline. Economists predicted a 3.1 percent drop.
Japan’s economy shrank in the last quarter by its most since the first oil crisis in 1974, hit by an unprecedented slump in exports, which is likely to lead to more calls for extra stimulus steps to fight the deepening recession.
Japan has not suffered much directly from the burst of bubbles in the U.S. credit and housing markets, but its heavy dependence on exports in the face of soft domestic consumption has led to a sharper contraction than most other rich countries….
With exporters cutting production and laying off staff and many retailers reporting sharp falls in sales, economists saw little hope of a bounce back for Japan.