Wednesday, November 7, 2012

Japan economy likely in recession

JAPAN - The composite index of coincident economic indicators for September dropped for the sixth straight month, indicating the national economy has likely entered a recession, according to the Cabinet Office.

The coincident CI, which reflects current economic conditions, stood at 91.2 compared with 100 for the base year of 2005, down 2.3 points from the previous month, the office said in a preliminary report released Tuesday.

In addition to declining exports stemming from a slowdown in overseas economies, some indicators, such as industrial output and shipments of durable goods, dropped due to sluggish domestic auto sales following the end of a government subsidy programme for purchases of environmentally friendly vehicles.

The Cabinet Office revised downward its basic assessment, saying the national economy has moved into a recessionary phase and is likely in the first stages of an economic slowdown.

This was the first such assessment made since May 2011, just after the Great East Japan Earthquake and tsunami.

Concerning future prospects, the Cabinet Office said it will be necessary to keep a close eye on the global economic downturn and exports.

Some market observers suspect the domestic economy entered a recessionary phase after peaking in March.

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