Japan goes into fourth recession

TIGHTENING purse strings in Japanese households have sent the country into its fourth recession in a decade. The government officially confirmed today what was already widely known, that Japan's economy shrank in the third quarter, after sinking into the red in the second quarter, and it is getting worse.

Gross domestic product contracted 0.5% in the three months to end-September, equal to an annual fall of 2.2%. In the previous quarter the drop was 1.2%.

If Japan's current deflation is taken into account the figures would have been worse, at minus 0.8%, the equivalent of a 3.1% annual contraction.

Biggest contributor to the decline was a sharp 1.7% drop in personal consumption, which reflected the growing concern about the economy and the sharply rising rate of unemployment, at a record 5.4%.

Exports over the period fell by 3.3% as the US market for Japanese goods, apart from motor cars, declined, but imports were also down as consumption fell.

The current quarter will be no better, predicted Economics Minister Heizo Takenaka. He warned that conditions in the October-December quarter could be 'severe'.