Japan economy shrinks further

Government says economy likely to contract by 3.3 per cent amid declining exports.

    Plunging exports drag Japan's economy into the worst contraction since the second world war [AFP]

    The news comes as the administration presented a record extra budget to parliament calling for 15.4 trillion yen ($159bn) in government spending to finance a new stimulus package.

    Last week, the finance ministry said Japan recorded its first annual trade deficit in 28 years in the just-ended fiscal year.

    Bleak projection

    The cabinet had previously predicted the country's gross domestic product (GDP), a measure of the total value of a nation's goods and services, would be flat in the current fiscal year until March 2010.

    "We need measures to support the economy for the long term"

    Hiroyuki Sonoda, senior LDP official

    It also said GDP was likely to have shrunk 3.1 per cent in the fiscal year that ended last month, worse than the previous estimate of 0.8 per cent.

    Based on the latest estimates, Tokyo now expects the two-year period to be the worst for the economy in the country's post-war history.

    The largest previous GDP contraction was 1.5 per cent in 1998.

    Meanwhile, a senior official in Japan's ruling Liberal Democratic party (LDP) said the country would need another stimulus package in the next fiscal year starting in April 2010.

    Hiroyuki Sonoda, the LDP's acting policy council chairman, told a meeting in Tokyo: "We need measures to support the economy for the long term."

    Japan has relied heavily on foreign sales of its cars and gadgets to drive economic growth, and is reeling from the collapse in global demand sparked last year by the US financial crisis.

    Its economy shrank an alarming annual 12.1 per cent in the October-December quarter, marking the steepest contraction since the oil shock of 1974.

    SOURCE: Agencies


    Survivor stories from Super Typhoon Haiyan

    Survivor stories from Super Typhoon Haiyan

    The Philippines’ Typhoon Haiyan was the strongest storm ever to make landfall. Five years on, we revisit this story.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    Thou Shalt Not Kill: Israel's Hilltop Youth

    Thou Shalt Not Kill: Israel's Hilltop Youth

    Meet the hardline group willing to do anything, including going against their government, to claim land for Israel.