Japan's economy on third straight quarter on declining exports

Japan's economy contracted at an annualized rate of 0.4 percent in the October to December quarter, on declining exports and business investment, marking the third straight quarter of contraction, data released by the government revealed Thursday. The latest gross domestic product figures came in well below median economists' forecasts for a 0.4 percent expansion from the previous quarter and highlight the fact that Japan is still in the midst of a technical recession, as the export-reliant nation struggles to shrug of decades of deflation, against a backdrop of slumping domestic and international demand for Japanese goods, amid an ongoing global economic turndown. Some economists pointed out however, that the pace of decline of the world's third-largest economy had slowed from the previous quarter, with ministers here hopeful that recent and upcoming fiscal and monetary policies will kick-start the sluggish economy back into gear and see deflation reversed under moves led by Prime Minister Shinzo Abe and Japan's central bank. "Although the Japanese economy will remain weak for the time being, it is expected to gradually pick up through the Bank of Japan's monetary easing and policy effects of emergency economic measures," Economic and Fiscal Policy Minister Akira Amari was quoted as saying by local media. For the time being, Japan, whose public debt is currently the highest in the industrialized world at more than twice the size of its economy, will have to be dependent on stimulus measures rolled out by the government to keep its economic situation from spiraling further, leading economists have suggested. "An extra spending bill is set to pass the parliament by the end of this month," economy minister Akira Amari said to this end. "We will implement it swiftly so that it will start impacting the economy this quarter." The figures released by the Cabinet Office showed that the economic contraction was largely due to a 3.7 percent decline in the export of Japanese goods and services abroad. An ongoing territorial row with China, Japan's largest trading partner, also contributed to the economic decline, strategists said, as Chinese consumers began boycotting Japanese products and services following illegal moves by Japan to nationalize the Daiyou Islands in the East China Sea last September. In the recording period, the government figures revealed that exports fell by an annualized rate of 14 percent, with imports dropping an annualized 9 percent. In addition the Cabinet Office said that falling external demand had reduced the nation's GDP by 0.2 point. Corporate spending fell for a fourth straight quarter by 2.6 percent, on an inflation-adjusted basis, the figures showed, and private spending was down 9.9 percent with outlays on durable goods, particularly automobiles, chalking up notable declines, due to a state-backed program subsidizing the purchase of eco-friendly cars expiring. In the October to December quarter, however, the total value of locally produced goods and services increased 0.4 percent and housing investments were up by 3.5 percent, the government said. Leading economists suggested that despite the weakening of the yen of late and the sharp rise of the Tokyo stock market, in twine with high-hopes for "Abenomics" the prime minister's hawkish approach to solving Japan's fiscal woes, Japan's fundamental economic recovery is still a long way off and the weakening of the yen would not necessarily translate to an immediate uptick in exports.