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Japan joins Europe in recession; G20 fails to cheer
(Agencies)
Updated: 2008-11-17 15:33 TOKYO -- Japan sank into recession in the third quarter, even before it felt the full force of the financial crisis, and world leaders at a weekend summit gave investors little hope they could rescue the global economy. With the euro zone also in recession, the US economy shrinking in the third quarter and China slowing sharply, markets shrugged off pledges to stimulate growth from leaders of the Group of 20 nations. The yen and US dollar pressed higher as investors pulled cash away from emerging markets and riskier assets. Oil fell more than $1 to below $56 a barrel and stock markets slid in early Asian trading. While the Japanese economy was weakening, the pace of the decline was unexpected. Analysts polled by Reuters had predicted the economy would expand 0.1 percent. Instead it shrank by 0.1 percent as exports crumbled faster than they had thought. The third-quarter data did not capture the full impact of the crisis that exploded in September, destroying Wall Street banks and threatening to rupture the global financial system. Japan had largely escaped the first shockwaves of the crisis triggered last year by US mortgage defaults. It felt the first major tremors in October when the Tokyo stock market crashed forcing banks to try to replenish capital and the yen surged, sideswiping exporters facing their toughest markets in decades. "I think that it is possible for the negative growth to continue in the second half of the fiscal year," said Tatsushi Shikano, a senior economist at Tokyo's Mitsubishi UFJ Securities. "The economy abroad, especially the United States, is slowing down and it is likely that exports will remain weak," he said. Fiscal And Monetary Steps The euro zone is in its first recession and the US economy only avoided one earlier this year because of a stimulus plan. Most economists say the United States is probably already in recession, although official data confirming that will not come until January. Leaders of the world's 20 largest economies, meeting in Washington over the weekend to address the worst financial crisis in 80 years, agreed on a host of fiscal and monetary steps to rescue the global economy. But they left it to individual governments to tailor their response to their own circumstances and troubled industries. "Taken as a whole, it does not appear that the outcome of the summit will be sufficient to stem the financial crisis. This was a high bar from the start," said Marc Chandler, global head of currency strategy with Brown Brothers Harriman in New York. |
