Japan

Japan’s economy shrunk by 3.3% in the last quarter of 2008, the worst three month period since the oil crisis of the 1970s.

The contraction means that the economy shrank at an annual pace of 12.7% during the October to December period. The Japanese Economic Minster Kaoru Yosano said that Japan faced its worst economic crisis since the end of WWII. Japan is the world’s second biggest economy and is experiencing a decline steeper than the US or Europe.

Japan has been particuarly hard hit by falling global demand for its products. Exports (especially electronics and cars) have slumped and production has been slashed. Exports fell by 13.9% in the third quarter of 2008 compared with the previous quarter.

Domestic consumption- which represents more than half of Japan’s GDP- dropped by 0.4% in the last quarter reflecting the fact that Japaese households are slashing consumption. Corporate capital spending fell by 5.3% in the quarter.

The Japanese Prime Minster Taro Aso is considering annother stimulus package to the economy worth £152bn. The public has lost almost total faith in Aso with fewer than 10% of people supporting him.

Further Reading

The orginal BBC article.

Impact of the strong Yen on Japanese firms (great article for revising/teaching exchange rates)

Japanese firms experience their biggest slump in confidence for 34 years.

The Times coverage of the Japanese slump.

Coverage from The Guardian