Japan's Economy in Recession

The world's second largest, Japan's economy entered its first recession since 2001 last quarter. The economists and the government say conditions may get even worse. GDP shrank an annualized 0.4 percent in the 3 months ended Sept. 30, the Cabinet Office said today in Tokyo. Leading economists predicted the economy would grow 0.1 percent after contracting a revised 3.7 percent in the previous period. The slowdown may deepen as the global financial crisis hurts exports, prompting companies from Toyota Motor Corp. to Canon Inc. to slash profit forecasts and cut investments. Japan has the lowest interest rates among the 20 biggest economies and public debt that exceeds 180 percent of GDP, limiting the government's ability to stimulate growth. "It's only going to get worse," said Masamichi Adachi. The Yen fell to 97.21 per Dollar as of 4:15 p.m. in Tokyo from 96.10 before the report as a stock-market rally across Asia prompted investors to fund purchases of higher-yielding overseas assets in the Japanese currency. The yen has gained 9.2 percent since the end of September, compounding exporters' woes.