Wednesday, May 20, 2009

Japan's GDP Drops Like a Stone


Japan's economy contracted at the fastest pace since 1955 as exports plunged and companies slashed production.

Japan's real gross domestic product, or the total value of the nation's goods and services, shrank at an annual pace of 15.2 percent in the January-March period, the government said Wednesday.

The result represents the steepest decline since Japan began compiling GDP statistics more than five decades ago. It also marks the fourth straight quarter of decline after the GDP fell 12.1 percent in the October-December period.
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On a quarterly basis, GDP fell 4.0 percent from the previous three-month period, according to the Cabinet Office's preliminary data.

Japan's first quarter results were markedly worse than other major economies, outpacing the euro zone's 2.5 percent quarterly decline and a 1.6 percent contraction in the U.S.

The world's second-biggest economy relied heavily on the rest of the world to buy its cars and gadgets to drive economic growth. Like the rest of Asia, it has been pummeled by the unprecedented collapse in global demand triggered last year by the U.S. financial crisis.
I can't even begin to imagine what this will do to Japanese society, especially coupled with the already-existing alienation with the old growth- and export-focused economy of the postwar era. The Post says that the numbers may have bottomed out, and I hope that's true, but the old system was on the bubble to begin with, and I think it's well and truly popped.

Japan could be going in a very different social and economic direction in the near future. Considering their newfound cultural impact on America, I wonder whether that will have an effect on the other side of the Pacific as well.

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