Global Biz

Japan's economy shrinks for 2nd straight quarter

(Agencies)
Updated: 2011-05-19 09:37

TOKYO - Japan's economy contracted sharply in the first quarter, taking a big blow from the massive earthquake and tsunami that devastated the northeast coast in March, the government said Thursday.

Real gross domestic product - a measure of the value of all goods and services produced domestically - shrank at an annualized rate of 3.7 percent in the January-March period, the Cabinet Office said.

The result marks the second straight quarter that the world's No. 3 economy has lost steam and undershoots an annualized 2.3 percent fall forecast in a Kyodo News agency survey.

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The March 11 earthquake and tsunami left more than 24,000 people dead or missing, and wiped out entire towns in the hardest-hit areas. It damaged factories in the region, causing severe shortages of parts and components for manufacturers across Japan, especially automakers.

A crippled nuclear power plant caused widespread power shortages that added to the headaches faced by businesses and households.

The first-quarter figure translates to a 0.9 percent fall from the previous three-month period, the Cabinet Office said.

Consumer spending, which accounts for some 60 percent of GDP, declined 0.6 percent. Capital investments by companies retreated 0.9 percent from the October-December quarter.