Japan declares it’s in recession

Japan’s economy slid into a recession for the first time since 2001, the government said today, as companies sharply cut back on spending in the third quarter amid the unfolding global financial crisis.

The world’s second-largest economy contracted at an annual pace of 0.4% in the July-September period after declining an annualized 3.7% in the second quarter. That means Japan, along with the 15-nation euro zone, is now technically in a recession, defined as two straight quarters of contraction.

The result was worse than expected. Economists surveyed by Kyodo News agency had predicted an annualized 0.1% rise in the third quarter.

But the worst may come in the wake of the global financial crisis, with dramatic declines in demand from consumers overseas for Japan’s autos and electronic gadgets. Hurt also by a stronger yen, more exporters are slashing profit, sales and spending projections for the fiscal year through March.