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.

Japan April-June GDP grows 0.3%

TOKYO: Japan's economy grew by 0.3 percent in the three months to June from the previous quarter, the government said Monday, the country's fourth consecutive rising quarter but at a slower pace than before.

The data from the Cabinet Office came in significantly weaker than market expectations for a 0.7 percent increase, as exports slowed due to weaker global growth amid the eurozone crisis.

It also marked a sharp contrast from a brisk 1.3 percent increase in the January-March period.

The government has taken a series of steps to spur growth, including offering incentives for fuel-efficient vehicle purchases and measures to rebuild the northern region hit by last year's deadly earthquake and tsunami.

But Japan's economy has faced headwinds caused by Europe's debt crisis, which has slowed growth worldwide, while a high yen has made Japanese exports less competitive in overseas markets.

Last week, the government downgraded its views on consumer sentiment and machinery orders, while the Bank of Japan effectively cut its assessments on exports and factory production.

Japan's May trade deficit jumps to US$11.5b

TOKYO - Japan logged a bigger-than-expected trade deficit of about US$11.5 billion in May as the nation's energy costs soared, official data showed Wednesday.

The 907.3-billion-yen shortfall marked a record deficit for the month of May and was 5.4 per cent higher than the 860.7-billion-yen deficit in May 2011.

It was also well above the 520-billion-yen deficit expected by economists.

The trade figures come as Japan struggles to meet its energy needs, turning to pricey fossil fuel alternatives after its nuclear reactors were switched off in the wake of last year's atomic crisis at the Fukushima Daiichi plant.

Imports jumped 9.3 per cent to 6.14-trillion-yen from a year earlier, largely due to rising purchases of foreign oil and gas.

Exports, meanwhile, rose 10.0 per cent to 5.23 trillion yen as shipments of automobiles and auto parts soared.

However, Tokyo posted its first-ever monthly trade deficit with the European Union since records started in 1979, as demand from the continent suffered. Europe is a major market for Japanese products.

Japan swings back to current account surplus

TOKYO: Japan swung back to a current account surplus in February after suffering a record deficit in the previous month, official data said Monday.

The surplus in the current account, the broadest measure of trade with the rest of the world, stood at 1.18 trillion yen ($14.4 bn), the finance ministry said.

The latest reading was 30.7 percent lower than a year earlier but largely in line with a 1.15 trillion yen surplus tipped in a poll of economists surveyed by Dow Jones Newswires and the Nikkei business daily.

The country logged a record 437.3 billion yen deficit in January due to lower exports and higher energy costs.

That was Japan's first deficit since January 2009, when the country posted a then-record shortfall of 132.7 billion yen at the height of the global financial crisis.

Japanese exports have been inching higher on the back of a recovery in the United States, a positive sign for an economy heavily dependent on overseas demand for growth.

The current account measures the value of a country's imports and foreign investments against the value of its overseas income such as exports of goods and services.

Asian nations to double currency swap deal

TOKYO: Japan and 12 other Asian countries will likely agree to double the amount of funds available under a regional currency swap pact amid uncertainty over the European debt crisis, a report said Sunday.

Japan, China, South Korea and the 10 members of the Association of Southeast Asian Nations (ASEAN) are to agree to double the fund from the current S$120 billion this month, Japan's Nikkei daily reported, citing unnamed sources.

The currency swap deal, known as the Chiang Mai Initiative, is designed to prevent a financial crisis in countries with relatively small foreign exchange reserves by giving them a safety net against future liquidity shortages.

Currently, up to 20 per cent of the S$120 billion in available funds can be used without linkage to loans by the International Monetary Fund.

The so-called ASEAN+3 countries are also expected to agree to raise this percentage significantly to prevent the European debt crisis from causing major damage in Asia, the Nikkei said.

The countries are expected to reach a broad agreement on strengthening the functions of the Chiang Mai Initiative at a meeting of senior finance officials in Cambodia at the end of this month, it said.

The agreement is expected to be finalised in May at a meeting of finance ministers and central bank governors from the ASEAN+3 countries, it said.