Friday January 30, 08:46 AM
As world economy sours, Japan sees no end in sight
TOKYO (AFP) - Japan announced a triple slump in key economic data Friday and said there was no end in sight to the bad news, as some of the country's most high-profile companies announced or forecast massive losses.
The data echoed gloomy reports on the health of the economy in the United States, where President Barack Obama took aim at what he called the "shameful" bonuses given to Wall Street bankers during the financial crisis.
Japan, the world's second-largest economy after the United States, said industrial output, consumer spending and employment were all sharply down.
December's 9.6 percent drop in industrial output from the previous month was the steepest such decline on record, raising fears Japan's economy suffered its biggest contraction in decades in the fourth quarter of 2008.
"The problem is very serious," Economics Minister Kaoru Yosano said. "As to when the economy will bottom out, it is impossible to predict at this time as the problem is not only domestic but global."
Japan's unemployment rate jumped to 4.4 percent in December, the country's highest rate in three years, while household spending tumbled 4.6 percent as consumers tightened their belts.
Analysts say Japan's economy now looks set to log its worst quarter since the oil crisis in 1974.
News of the global slowdown was no surprise to Japanese companies, which announced a raft of gloomy earnings data on Friday that underlined the severity of the crisis facing Asia's largest economy.
Hitachi (Xetra: HIA1.DE - news) forecast a loss of 7.8 billion dollars for the fiscal year ending in March and announced it would cut up to 7,000 jobs, while electronics giant NEC (Berlin: NEC1.BE - news) said it expects to lose 3.2 billion dollars.
All Nippon Airways, Japan's second-biggest airline, said it now also expected a loss for the current fiscal year. Honda Motor (Paris: JP3854600008 - news) said net profit in the fiscal third quarter was down 89 percent.
The country's second-largest bank, Mizuho Financial Group, announced it lost 565 million dollars in the nine months to December.
"The economic situation in and outside of Japan has been deteriorating rapidly," Mizhuo said in a statement.
Amid the gloom, the new US president lashed out at Wall Street after a report that bankers had been given more than 18 billion dollars in bonuses last year.
"That is the height of irresponsibility. It is shameful," Obama said, calling on US financial firms to "show some restraint and show some discipline and show some sense of responsibility."
Just months after major Wall Street firms asked for billions of dollars in government aid, the report will give ammunition to critics of federal bailout measures as well as Obama's proposed 819 billion dollar stimulus package.
The House of Representatives has passed the measure, which will now be sent to the US Senate, where Republicans are vowing to fight for more tax cuts and targeted investment in the bill.
Asian and European stock markets were mostly down.
Tokyo closed off 3.12 percent. As European markets opened, London's FTSE 100 dipped 0.04 percent, Frankfurt's DAX 30 (Xetra: news) slipped 0.18 percent and the CAC 40 (Paris: news) dropped 0.32 percent.
Hong Kong bucked the trend, rising 0.9 percent.
The Japanese data came a day after the United States said new home sales plunged almost 15 percent in December to the lowest monthly level on record, while the number of people seeking unemployment benefits hit a record high.
- Dow Jones Newswires contributed to this report -
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