Japan Economy Shrink Estimated at 10.6%

123jump.com Staff
12 Feb, 2009
New York City

Stocks in Tokyo trading dropped sharply after a private think tank projected economic contraction at annual rate of 10.6%, the first double digit decline in more than fifty years. Separately, Bank of Japan reported 0.2% decline in wholesale price index.

[R]5:00AM New York, 7:00PM Tokyo - Wholesale prices index in Japan drops 0.2% in January. A group of private think tank economists projected to slump 0.2% in December 2008 quarter.[/R]

Japanese stocks fell sharply on fears the U.S. financial rescue plan will be insufficient to arrest the deteriorating conditions on the financial market.

Investor sentiment was further weakened after a local think tank reported that the economy may have contracted at annual rate of 10.6% in the last three months of 2008.

In Tokyo trading Nikkei 225 fell 3% or 240.58 to 7,705.36, and the broader Topix Index lost 2.3% or 17.81 to 760.29.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 601 billion yen were traded and in the second section 134 million shares valued at 878 billion yen changed hands.

Of the Nikkei 225 index stocks, 27 rose, 192 declined, and 6 were unchanged. Sumitomo Osaka led advancers in the index shares with a rise of 8.6% followed by Kobe Steel gaining 6.8%.

Wholesale Prices Fall 0.2% in January

Bank of Japan reported today that the domestic corporate goods price index fell 0.2% in January from a drop of 1.1% the previous month. Analysts had earlier forecasted wholesale prices will drop 0.3%.

The export price index dropped 1% in the review period from 0.8% a month ago to 98.5, while the import price index shed 13.5% in January to 111.2.

Japan''s Economy Forecasted to Fall 10.6% in December Quarter

Asahi News reported today that the Economic Planning Association- a grouping of think tanks- projected an economy may have contracted at annual rate 10.6% in the last three months of 2008.

The fall is estimated to be the first double-digit contraction in a quarter since 1955.

Preliminary GDP figures for October-December period will be announced on Monday next week.

According to the association, which is an affiliate of the cabinet office, the economic contraction will continue through the July-September quarter of this year.

The think tank projected the gross domestic product will drop 2.2% for fiscal 2008 and decline 2.6% for the following year on a fiscal year basis.

However, an economic rebound is projected for fiscal 2010 when economic growth is forecasted to advance 1.2%.

Gainers & Losers

Sumitomo Osaka led advancers in the Nikkei 225 index shares with a rise of 8.6% followed by increases in Kobe Steel of 6.8%, in Kubota Corp. of 6.1%, in Sumitomo Metal Mining of 5.3%, and Nippon Oil Corp. of 4.5%.

Commodity stocks increased as metal stocks rallied. Nippon Mining House climbed 4.3%.

CSK Holdings Corp. led decliners in the Nikkei 225 index shares with a decline of 14.7% followed by losses in Yokogawa Electric of 14.1%, in Tokai Carbon Co. of 8.8%, in Alps Electric Co. Ltd of 7.9%, and Daiwa Securities Group of 7.8%.

Shipping lines dropped. Kawasaki Kisen tumbled 7.2% and Nippon Yusen fell 6.7%.