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Japan output slump heralds deep downturn
(Agencies)
Updated: 2008-11-28 16:55 SINGAPORE -- Japan's industrial output and household spending tumbled in October, evoking memories of the decade-long stagnation of the 1990s and highlighting how rapidly the global financial crisis was derailing major economies.
Countries as diverse as Canada, India and South Korea also released figures painting a bleak economic picture, but stocks edged higher as investors tentatively looked for bargains after an unprecedented six months of falls for global equity markets. The speed at which Japanese companies were slashing production and consumers were scaling back their spending, surprised economists and suggested the world's second-biggest economy was in for a deeper and longer recession than earlier thought. "Production is falling much faster than we had expected. Companies are adjusting their production very quickly," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research. "The auto makers are the worst hit, but their turmoil is starting to spill over to other sectors, such as steel makers." Reflecting the gloom, a top executive at Honda Motor Co told Reuters Japan's no. 2 automaker faced a "Herculean task" meeting its already downgraded profit goals for this year. The data still showed India, Asia's third-largest economy, was losing momentum from the previous quarter's 7.9 percent growth, with the outlook clouded by fears that militant attacks that killed at least 121 people in Mumbai may cripple foreign investment. The violence in India's financial hub and a state of emergency in Thailand underscored political unrest as another potential threat to emerging markets battered by the crisis. In South Korea, Asia's fourth-biggest economy, an unexpected sharp drop in factory output in October made some analysts brace for a full-blown recession rather than a slowdown projected by the authorities. Earlier on Thursday, Canada joined the growing number of nations officially in recession, with Japan, Germany, Italy and the euro zone as a whole already on the list and the United States and Britain expected to get there soon. The Canadian government said it expected the world's ninth largest economy would contract in the current and next quarter. But unlike many of its peers, it offered scant immediate relief to the economy, drawing ire from opposition parties and raising the prospect of an early election. Shopping Blues With the US holiday shopping season kicking off on Friday, the day after the Thanksgiving holiday, businesses and investors expect more grim news. The concern is that even deep discounts offered by struggling US retailers will fail to lure shoppers, fearing for their jobs and squeezed by rising debt. Authorities have responded, spurred by mounting evidence that the financial industry upheaval triggered by heavy losses in the US housing market is pushing the world economy into its worst downturn in decades. |
