Japan’s Economy Shrivels

Japan’s Economy Shrivels

http://www.ft.com/cms/s/0/8cb1fbc8-fbc7-11dd-bcad-000077b07658.html

The economy of Japan shrank by 3.3 percent in last quarter of 2008, as compared to the previous quarter in the same year. This is considered to be the worst performance in 35 years as a result of slow down in exports. The gross domestic product also declined at a rate of 12.7 percent, emphasizing the gravity of the slump. This goes on to prove that the second largest economy of the world may not be able to avoid the effects of the meltdown.

The GDP data will build pressure on the government as well as the Bank of Japan to take more action to stimulate the economy. The Bank of Japan has cut its policy interest rate to a mere 0.1 percent. It has increased the financial system liquidity and also agreed to buy corporate debt in a drastic effort to ease the credit conditions for the Corporate Sector.