Japanese Economy Heading Towards a Recession

Seal of the Government of Japan

Preliminary figures suggest that the economy of Japan is heading for a recession after a year with strained relations with China, a major trading partner, and an extremely strong yen currency, both of which have combined to result in a slowdown for the world’s third largest economy.

Revised official data on Monday morning showed that the Japanese economy shrank very slightly in the second quarter of 2012, by 0.03%, before contracting by 0.9% between July and September.

Economic figures are expected to remain weak through the end of the year, turning up pressure on the Japanese government to take preventative actions to stymy further deterioration in the economic situation. A recent $10.7 billion stimulus package passed by the Diet may have some impact but early polls suggest it may be too little to save current Democratic Prime Minister Yoshihiko Noda from losing in upcoming elections to the Liberal Democratic Party of Japan which ruled the nation for decades in an unbroken string of electoral successes stretching back to the 1950s. The Democratic Party of Japan was elected on a wave of disillusionment with the LDP and its patronage-style politics, yet the inability of the Democrats to stoke growth in Japan’s long slumbering economy has left their credentials wanting.


[The Guardian]