16 February 2009 06:51 [Source: ICIS news]
(Recasts headline and lead for clarity)
Official government data showed that
It was also Japan's third consecutive quarterly decline in economic output largely because of its dependence on exports.
The contradiction between
The dollar-yen pair is expected to stay low, hovering around Yen(Y)90 in the next few months despite the weak Japanese economy, economists said.
“That will continue to crimp export growth” and weaken Japan’s economy further, said Thomas Lam, Singapore-based treasury economist at United Overseas Bank.
Petrochemical production in
Downstream polymer production rates have dropped to as low as 40-50% in the first quarter, he said.
Japanese manufacturers typically keep low stocks during this period and will resume buying activity in April, he added.
Industrial production in
“There’s a possibility we will face a deflation,” said Toshihiko. “The Bank of Japan (central bank) has to act more aggressively on policies and we need more stimulus packages to boost demand.”
To ease the pressure on its corporate sector, the government can consider cutting the tax rate from the current 50% to 30%, he said.
But the economy’s recovery critically depends on a rebound in external demand, economists said.
UOB’s Lam pointed out that 90% of GDP contraction in the December quarter was attributable to the fall in external demand.
With additional reporting by Steve Tan
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