Tokyo Considers Stimulus Package Companies Pare Plans as Annualized Fourth-Quarter GDP Plunges 12.7%

Tokyo Considers Stimulus Package

Companies Pare Plans as Annualized Fourth-Quarter GDP Plunges 12.7%

Sandra Fickweil

02-18-2009

1:00 am

In the last quarter of 2008 Japan's economy decreased and will probably underperform other major nations early this year as demand for its goods collapses.

The article says that Japan's GDP shrank by 3.3 % and the world's second largest economy also had a decline in export and corporate spending. According to Kaoru Yosano, the economy faces "without a doubt, the worst crisis since World War II".

And the crisis is even getting worse: companies such as Toyota Motor Corp., Nissan Motor Co., Sony Corp. and NEC Corp. said that they will eliminate thousands of jobs during the year. The article notes that Japan's economic output will drop by 20 %, export sank enormously in the last years, and the jobless rate increased essentially. Yoshiki Shinke says that "it's very likely we'll see another double-digit decline for the current quarter".

Due to Obama's administration stimulus however, economists predict that the rate of contradiction could slow down soon. After the Group of Seven nations in Rome, where finance ministers and central bankers met, Mr. Yosano said that Japan will boost l 20 trillion to 30 trillion yen ($218 billion to $327 billion) for the economic stimulus. Although Japan has already one of the biggest debts, this should boost economy.

Due to the fact that Japan's economy is highly dependant on global demand and customers, its economy is shrinking even faster compared to Europe or America. During the last six years exports to China and other Asian nations increased as demand of cars in Europe and North America decreased. Goods were even shipped back from China to Japan and exports highly decreased, especially in December 2008 (36%). Union Tool Co. spokesman said that "our sales in China began to falter around July, collapsed in October and are still dropping." As this company foresees a net loss for the six months through May, they predicted to cut executive pay.

After reading this article I was quit surprised that Obama's economic stimulus plans have already affected another country, although it has just been passed. However due to the positive forecast and perhaps the hope that this money spent in the US will somehow land in Japan, economy starts to improve and hopefully this effects will also take place in other countries around the world.

http://online.wsj.com/article/SB123482989082995519.html?mod=googlenews_wsj