Japan falls into recession, again

Japan GDP May11.pngJapan’s ageing population has led to slow economic growth for many years. It has battled for years to try and boost domestic demand, with only limited success, as the chart of GDP growth from the Wall Street Journal shows.

Occasional bursts of growth (green column) are only followed by more red ink. Thus the economy was already slipping back into recession in Q4 last year. Now, of course, the Disaster in March means any recovery will be further deferred.

Q1 GDP fell by 3.7%. And even the Economy Minister is only hoping for 1% GDP growth over the year to March 2012. Both consumer and business spending were down, and there is little sign yet of any stimulus from reconstruction.

Instead, the downturn is likely to intensify during Q2, as inventories are run down. And until power supplies return to some kind of normality, the rebuilding process will be very slow.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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