Tokyo (AsiaNews/Agencies) – Japan's economy shrank a record 4 % in the first quarter of 2009. Experts say prospects for recovery are looking bleak, despite timid signs of recovery.The fall was worse than the United States (-1.6%) and Europe (-2.5%). On an annualised basis, gross domestic product fell 15.2%.
The economy contracted 3.5 per cent in the year to March, the most since records began in 1955. Weaker domestic demand was the biggest contributor to the quarter's decline, shaving 2.6% off GDP, as well as a decline in Net exports (-26% compared to the same time last year) accounting for 1.4 %of the drop.The government had hoped to stimulate internal demand, through fiscal stimulus plans. But so far they have not been sufficient to balance out rising unemployment and fears for the future which lead to a reduction in consumer spending.
Bank of Japan Governor Massaki Shirakawa (see photo), said the rebound in output around the world was due solely to restocking and that consumption and investment would remain weak. Finance Minister Kaoru Yosano shared his caution. “It will take considerable time and hardship for Japan to return to a growth path as in the past and there are many preconditions for this, such as how economic performance improves in other countries. The worst is probably over, but more efforts will be needed for the economy to ride an updraft." Even if he maintains that the effects of the government stimulus package amounting to a massive 15.400 billion Yen have yet to be felt.
While most economists are confident that output is no longer in freefall, many feel that any recovery will be due to the stimulus plan and could be followed by another fall. They also warn that there needs to be a re-think of models for develeopment and that Tokyo must tackle long-term problems such as its huge fiscal debt and ageing population.
