Here is from IHT:
Gross domestic product contracted 0.5 percent in July-September, far more than the preliminary figure of a 0.1 percent decrease and economists' median forecast of a 0.2 percent fall. Japan's economy shrank at an annual rate of 1.8 percent in the quarter, three times faster than the contraction in the U.S. economy in the same period.
"The revision was bigger than expected. Given further weakness in exports and capital spending since October, the economy's contraction will deepen in the fourth quarter," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities. "The Japanese economy will likely shrink in the financial year to March."
The revision was mainly due to a markdown in inventory and government spending.
The export-driven economy now looks likely to keep contracting at least until the first quarter of next year, which would mark unprecedented four straight quarters of decline, as leading Japanese manufacturers cut outputs sharply to deal with slump in global demand.
The euro zone and the United States are also in recession and growth is slowing in big emerging markets, such as China, boding ill for big Japanese exporters like Toyota and Sony.
Capital spending, a key driver of growth until recently, was revised downward slightly to a 2.0 percent contraction, from 1.7 percent, a change not large enough to affect the overall growth rate.
The meltdown of global financial markets since mid-September has shattered hopes for a short and shallow recession in Japan. The previous record was three quarters in a row, as in the last contraction seven years ago in the wake of the dotcom bust.
While the weakness until the third quarter largely stemmed from high oil prices, the economy is expected to bear the full brunt of the global downturn in the fourth quarter and beyond.
Recent data showed that Japanese companies are curtailing production at an unprecedented pace as demand plunges not just in the United States, the world's biggest economy, and Europe but also in emerging nations that had until recently weathered the global financial storm.
A sharp appreciation in the yen since October is also hurting exporters, as a higher yen cuts overseas earnings in yen terms and also limits their competitiveness.
The downturn was much more severe than previously thought, said Susumu Kato, chief economist at Calyon. "We've been expecting a 0.4 percent contraction in fiscal 2008/09 but that now needs to be revised down. It's hard to see at this point how the economy will return to a recovery."
Japanese consumption should benefit from sharp drops in oil and other raw material prices but economists say it will take time before such positive effects are felt.
Economists say the closely watched "tankan" corporate survey by the Bank of Japan due next Monday will show a plunge in Japanese corporate sentiment.
Some analysts speculate the Bank of Japan will cut interest rates again by the end of the current business year next March, after trimming its key rate to 0.30 percent from 0.50 percent in October. However, derivative contracts are pricing in less than 30 percent chance of another 0.20 percentage point cut by then.
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Sources :
- The International Herald Tribune: Japan revises 3rd quarter GDP downward, December 9, 2008
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