Japan recession in 2011



First, the natural catastrophes. Now, the economic disaster.
The massive earthquake and tsunami that hit Japan in March 2011 brought the world’s third largest economy back into recession, after its Gross Domestic Product (GDP) contracted by 0.9% during the first quarter of the year.
In the last quarter of 2010, the Japanese economic output, measured by GDP, fell by 0.3% compared to the previous quarter.
Japan is, technically, now back in recession because the generally accepted of recession is “two consecutive quarters of negative economic growth.”
Japan fell into recession during the global subprime mortgage crisis in 2007 but emerged from it in 2009. Since then, the country has not experienced two consecutive quarters of negative economic growth, that is, until the March 2011 natural disasters.
Analysts forecasted the country’s economic output to shrink  by 0.5% during the first quarter of 2011 but figures recently released by the Bank of Japan showed that the contraction in the economy was 0.9%, with the full-year (annualized) decline expected to reach 3.7% — as opposed to a 2.0% growth forecast by the government.
More gloomy figures in Q1 2011:

  • Japan’s public consumption fell 0.6% as citizens cut down on spending
  • Consumer confidence index dropped to 33.1 (a reading below 50 suggests consumer pessimism)
  • Japan’s trade surplus fell by 34.3% year-on-year, suggesting fewer exports

The only good news (at least for debtors and businesses) is that the Bank of Japan is expected to keep the interest rates at 0.0%-0.1% to help stimulate the economy.
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