Japan Falls Deeper Into Recession in Latest Quarter

Japan’s economy has sunk deeper into recession, shrinking at an annual rate of 2.6% in the latest quarter and marking a startling four consecutive quarters of contraction.

Japan’s gross domestic product--a measure of all goods and services produced--slid 0.7% from July through September from the previous quarter, the government reported Thursday.

It is the first time the economy has contracted for four consecutive quarters since the government started compiling growth statistics in 1955. The figures show Japan remains mired in its worst recession since World War II.

The latest sign of economic weakness in Japan means that other struggling Asian nations will have to wait even longer for that country, normally the region’s strongest economy, to help pull its neighbors out of an economic slump.

Japan’s leading economic official, Economic Planning Agency head Taichi Sakaiya, told a news conference that the economy is unlikely to meet a government target for negative 1.8% growth in the fiscal year ending next March.

But he said the worst may be over, and he expressed relief that the latest batch of data do not contain negative surprises.

“These figures actually were a little better than I expected,” he said.

Many private sector economists were less sanguine.

“This talk about bottoming out is extremely premature,” said Ron Bevacqua, economist in the Tokyo office of Merrill Lynch, who expects Japan’s economy to shrink 2.1% in the current fiscal year.

The government has tried to jump-start the economy with massive investment in public works projects and temporary tax relief.

Its latest stimulus package totals a record $201 billion.

But consumer spending, which accounts for two-thirds of the overall economy, remains sluggish as people tighten their purse strings amid growing fears about job security and falling incomes. Japanese corporations have also trimmed outlays on new plants and equipment.