Japan has slumped into its third recession in a decade and the economy is set to weaken further as unemployment rises amid weak consumer demand and the global slowdown, the government said today.
Gross domestic product (GDP) in the three months to September fell 0.5 per cent from the previous quarter, when the world's second-largest economy shrank a revised 1.2 per cent.
Two consecutive quarters of contraction are widely defined as recession.
"The US economy is experiencing negative growth at the moment and it is quite possible that we will see a severe figure for October-December," State Minister for Economic and Fiscal Policy Mr Heizo Takenaka told a news conference.
On an annualised basis, Japan's economy shrank 2.2 per cent during the three months to September and 4.8 per cent in the June quarter.
Mr Takenaka referred to a "fear economy", with Japanese reluctant to spend due to concerns about their prospects as unemployment rises to unprecedented heights. "Households seem more concerned about the future than we expected," he said.
Consumer spending, which accounts for two-thirds of Japan's GDP, sank 1.7 per cent over the quarter, the sharpest slide since the end of 1999, due to rising unemployment and wage cuts.
Japan's jobless rate climbed to a record high of 5.4 per cent in October, and most economists expect the level to hit 6 per cent by next year. Lay-offs and wage cuts were happening faster than the government had expected, said Mr Takenaka.
AFP