Japanese admit to new recession

THE Japanese economy will shrink 0.9% this year, its biggest fall since 1980, and the outlook is worsening as business confidence continues to evaporate.

The government has finally scrapped its earlier forecast that gross domestic product will grow 1.7% this year and acknowledged for the first time that the country is moving into its fourth recession in a decade. GDP in 2000 grew 0.9%.

The government's forecast came as it put before Parliament a three trillion yen (£17bn) supplementary budget designed to cushion the impact of the economic contraction on workers and small businesses.

Unemployment would remain at close to a record high of 5.3% for the rest of the year, the government warned. The cabinet is expected to use the economic gloom as further evidence of the need to push forward structural reforms.