Could Japan Fall in Recession?


After 6 years of rapid expansion, the Japanese economy is beginning to slowdown and could even be in a recession phase. But, how bad this downturn is likely to be? Will the Japanese economy slow down as the United Kingdom or the United States economy did?

Indeed, during the last few weeks a flow of economic data has been confirming the coming slowdown of the Japanese economy. For instance, second round effects of a sharp increase in food and energy prices have caused retail sales to fall, consumer confidence to slump and bankruptcies to increase. Yet, although the GDP growth is expected to be negative in second and third quarter, the first quarter growth of 4 per cent may still add up to the strong number for the year. In addition, Japan hasn't experienced a house price bubble or credit crunch. In fact, even though land investment is slumping due to stricter lending standards, the situation in the real estate market is far better than in the United States, the U.K. or Spain.


Anna Fedec, analyst@tradingeconomics.com
8/9/2008 4:36:49 PM