Japan Government Says Economy Is ‘Worsening Rapidly’
Written on January 22, 2009
The Japanese government said the economy is “worsening rapidly” and the collapse in exports and production is likely to prompt companies to fire more workers.
The government lowered its economic assessment for a fourth month, capping off the longest stretch of downgrades since May 2001, according to a report released by the Cabinet Office in Tokyo today. It cut the evaluation of exports, industrial output and consumer spending.
Shipments abroad and factory production are “decreasing substantially,” the government said, using the language for the first time after both fell at a record pace in November. The manufacturing slump could lead to “significant” job losses, the report said.
“All economic indicators point to a rapid deterioration,” said Economic and Fiscal Policy Minister Kaoru Yosano. “It’s hard to imagine a recovery in the next few months.”
Toyota Motor Corp. will cut all 4,500 temporary workers at its 12 Japanese plants this year because of falling vehicle sales, the Yomiuri newspaper reported today, without saying where it obtained the information. Japan’s unemployment rate rose to 3.9 percent in November.
Parliamentary Gridlock
Gridlock in parliament is hampering Prime Minister Taro Aso’s efforts to revive the world’s second-largest economy, which has been shrinking since the second quarter of 2008 payday advance. The opposition- controlled upper house is debating whether to approve a bill authorizing spending of 4.8 trillion yen ($53 billion), including 2 trillion yen in handouts to households that have been unpopular among the public as well as lawmakers.
Consumer confidence dropped to a record low in December, the Cabinet Office said in a separate report today, indicating household spending is unlikely to pick up after declining for nine straight months. Other figures showed service demand declined in November from a month earlier.
The government also downgraded the assessment of housing starts and imports.
“What’s unique about this recession is that it’s very steep,” said Fumihira Nishizaki, director of macroeconomic analysis at the Cabinet Office. “I can’t say when the downturn will hit bottom.”
Filed in: finance.