TOKYO, Aug 13 (AFP): Japan said today falling exports and weak consumer spending sent Asia's largest economy hurtling toward its first recession in six years.
The slump reflects the rapidly deteriorating global economic climate, with fears of a recession in the Eurozone also mounting as the fallout from the US financial crisis ripples around the world.
Japan's gross domestic product (GDP) shrank by 0.6 per cent in the three months to June from the previous quarter, the cabinet office said, marking the first time in a year that the world's second-biggest economy has contracted.
The economy shrank by 2.4 per cent on an annualised basis, matching market expectations.
The slump put Japan on the cusp of outright recession, which is usually defined as two or more straight quarters of economic contraction. The last time that happened in Japan was in 2001, when the recession lasted for three quarters.
Tokyo share prices slumped 2.1 per cent as the weak growth figures added to jitters about problems in the US banking sector.
GDP growth for the first quarter of 2008 was also revised down to 0.8 per cent quarter-on-quarter from 1.0 per cent previously.
Economic growth "will remain very weak throughout this fiscal year," said Mamoru Yamazaki, chief economist for Japan at RBS Securities.
"The increase in oil and commodity prices is damaging corporate profits," while rising inflation is hurting households, he said.
After suffering a series of on-off recessions in the 1990s following the bursting of the economic bubble, Japan had been slowly recovering on the back of brisk exports and business investment.
Japan's government, however, last week effectively declared an end to the country's longest period of economic expansion in postwar times.
