2008 Japan in recession?
I hate to be the bearer of bad news but we’re not yet into the second half of January and things are already looking bad.
Goldman says Japan in danger of recession [Reuters]
Goldman’s Japan economists said in a note to clients that the probability of a recession in the world’s second-largest economy was 50 percent, forecasting slow growth in the first half of the year as emerging market economies cool.
On Wednesday, Goldman’s U.S. economists predicted a recession this year due to the housing market’s tumble and weaker consumer spending, predicting the Federal Reserve would cut overnight rates to 2.5 percent from the current 4.25 percent in response.
Automobile sales in Japan fell last year to a 35-year low as a shrinking population and limited wage growth hurt demand, an industry group said.
Figures from the Japan Automobile Dealers Association showed sales of cars, trucks and buses down 7.6% from the previous year at 3.4 million.
Daihatsu was the worst off with sales slumping almost 50%, followed by Nissan whose sales fell 9.7%.
Tokyo’s bustle at odds with fragile outlook [FT Deutchland]
Housing starts have collapsed, because of tighter standards that were hastily implemented, while sales of trust funds have plunged as the result of new legislation. Wages have meanwhile remained subdued and consumer confidence has dropped sharply this year.
Although there have been hardly any corporate failures large enough to make the headlines, the number of bankruptcies overall has been inching up year-on-year for the past 12 months. Bankruptcies among small and medium-sized companies in particular are up 29 per cent in the first half of the year compared with the same period last year, according to Teikoku Data Bank, an independent research firm.
In perhaps the most worrying sign so far, the government in early November revealed that the index of leading economic indicators hit zero for the first time in a decade. So, after five years of growth, is Japan’s economy slowly grinding to a halt?
Recent trends are giving some economists grounds for concern. “The Japanese economic recovery remains somewhat fragile,” writes Tetsufumi Yamakawa, chief economist at Goldman Sachs. “The probability of a recession occurring within the next six months … has not reached the danger level of 60-70 per cent, but it is gradually rising, reaching 40.5 per cent in September.”