Real GDP shrinkage estimated at 10.6%

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Japan's economy shrank more than 10 percent on an annualized basis in the last quarter of 2008, according to think tank estimates, fueling fears the downturn will be the worst in the postwar era.

According to the average of estimates by 35 private-sector think tanks, the nation's real gross domestic product contracted an annualized 10.6 percent in the October-December period from the previous quarter.

The only other time real GDP has posted a double-digit contraction in a quarter since 1955, when comparable statistics became available, was the January-March quarter of 1974, when GDP fell 13.1 percent amid the first oil crisis, according to the Economic Planning Association, which compiled the report.

The association, an affiliate of the Cabinet Office, released the report Tuesday.

The government will announce preliminary GDP figures for October-December on Monday.

According to the think tanks' forecasts, the current contraction, which started in April-June 2008, will continue through the July-September quarter of this year.

The contraction over six straight quarters will be the longest since World War II ended.

On a quarter-by-quarter basis, the longest real-term GDP decline has been three consecutive quarters, marked twice so far.

One was in 1993, following the collapse of the asset-inflated bubble economy, and the other in 2001, during the recession triggered by the slumping information technology industry.

On a fiscal year basis, the think tanks forecast a drop in real GDP of 2.2 percent for fiscal 2008 and of 2.6 percent for the following year, both records.

The largest decline recorded so far was 1.5 percent in fiscal 1998.

The think tanks do not see an upturn happening until fiscal 2010, when real GDP is expected to grow 1.2 percent.

The institutes' view that the Japanese economy is heading toward its worst postwar slump is apparently shared by Bank of Japan officials.

Kazuo Momma, director-general of the central bank's Research and Statistics Department, said Monday that a double-digit contraction, estimated for October-December by private institutes, could continue into the January-March quarter.

"It is becoming inevitable for us to consider the possibility the drop could be worse" in the first quarter of 2009, he said.

Speaking at the Japan National Press Club in Tokyo, Momma said Japan's GDP decline will be sharper than that in the United States.(IHT/Asahi: February 12,2009)


Link to the article -> http://www.asahi.com/english/Herald-asahi/TKY200902120061.html
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10.6% shrinkage of Real GDP..... didn't expect the Japanese economy is so bad like this. No wonder the job hunting is really difficult for this year.　The increase in real exchange rate of Japanese yen is very good for me studying in Canada (today 1 yen= 72.8 Canadian dollars!), this is pretty bad for export industries,and deficit increases further.... how the Japanese government is trying to getting free of this economic turmoil?