Revised data shows Japan heading towards recession

Last Updated: Tue, Dec 11, 2012 08:42 hrs

Japan's economy shrank for a second quarter in a row in the quarter ended in September, revised government data has revealed, indicating that a mild recession has begun amid sluggish global demand.

The Cabinet Office said gross domestic product fell at an annual pace of 3.5 percent in inflation-adjusted terms, unchanged from preliminary data.

But it revised the GDP figures for the preceding quarter to a small contraction, matching the textbook definition of a recession, the Japan Times reports.

According to the report, with the data presenting a clearer view that the economy is contracting, political pressure is likely to rise on the government to craft fresh stimulus measures after general election on Sunday and for the Bank of Japan to further loosen monetary policy.

GDP shrank 0.9 percent in July-September, unrevised from the preliminary data released on November 12.

Exports were downgraded to a 5.1 percent drop from the earlier reported 5.0 percent fall. Public investment was also revised down to a 1.5 percent rise from a 4.0 percent gain, the report added.

Noting the economy is likely to have entered a recessionary phase after hitting its peak in March, Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co., said the economy is "likely to stay weak for a while."

"The data reaffirmed that the momentum of reconstruction demand (from the massive quake last year) has been slowing," he said.

"While reconstruction demand is not strong enough to bolster the economy, external demand has been sluggish," he added. (ANI)

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