BBC

Friday, 7 September, 2001, 00:43 GMT 01:43 UK Japan heads towards recession

Japan has not been able to drag itself out of trouble By BBC economics correspondent Andrew Walker

New figures show that Japan's economy shrank 0.8% in the second quarter of the year.

The news adds to the concerns about the global economy arising from the slowdown in the United States.

Japan has been growing weakly or not at all for most of the last 10 years.

The world has lived with that until recently, because of very strong performance in the US and passable economic growth in Western Europe.

But now all three of the major economies have deteriorated more or less together.

It is the first time that has happened since the mid-1970s.

All three have had recessions since then, but not at the same time, so that while one slowed the another was able to provide some momentum for the rest of the world.

Bad news for Asia

Japan's latest deterioration is particularly bad news for many other countries in east Asia.

Japan is the largest export market for Indonesia and an important one for just about every other country in the region.

Already the global slowdown has produced thousands of job cuts around the world, and some forecast that as a warning of the possibility, no more than that, of a world recession.

The most important piece of good news recently is some early and tentative signs of a recovery in the US, where the current slowdown started.

And the two largest developing economies, China and India, have not been hit so hard, so far.

But for many rich and poor countries there will at the very least be a few more painful months while they wait for a decisive improvement in the US.

None are relying on Japan to provide the wanted stimulus to the global e

-- Anonymous, September 06, 2001

Answers

Japan has been in a recession for 10 years now. Imagine that, a 10 year recession. Their interest rates hover just about 0%, and that has not been any catalyst for a turnaround. So, as our own Fed keeps dropping interest rates, don't expect anything too dramatic to happen. It didn't work in Japan, and probably won't work here either.

-- Anonymous, September 07, 2001