News & Current Affairs

September 12, 2008

Japan’s economy sees a sharp fall

Japan’s economy sees a sharp fall

Japanese shoppers

Japan now seems at real risk of recession

Japan’s economic output has recorded its sharpest quarterly fall in almost seven years as the country appears to be falling into recession.

The world’s second largest economy contracted at an annualized rate of 3% in the April to June quarter, as both domestic demand and exports weakened.

It was the first decline in more than a year, and the biggest since the third quarter of 2001.

The government has called on firms to raises wages to help boost spending.

The Japanese economy, like most around the world, has also been affected by higher energy and food prices.

“It is desirable that income for employed people increases,” said Economy and Fiscal Policy Minister Kaoru Yosano.

“We want company managers to recognize that pay rises would compensate for price rises.”

Last month the Japanese government announced an economic stimulus package worth 11.7 trillion yen ($107bn; £61bn).

A country is generally considered to be in recession when it sees two consecutive quarters of declining economic output.

August 26, 2008

German shopper mood remains weak

German shopper mood remains weak

Shoppers in Berlin

German consumers are not in an optimistic mood

German consumer confidence has fallen to a fresh five-year low, as recession and high inflation fears continue to sour the mood among shoppers.

The news came from market research firm GFK, whose forward-looking consumer confidence index has dipped to 1.5 points for September from August’s 2.1.

Further gloom was offered by restated official data which confirmed that the economy contracted from April to June.

Germany’s economic output fell 0.5% quarter-on-quarter in the period.

If this contraction was to continue between July and September, then Germany would formally be in recession.

‘Depressed mood’

Fueled by high energy and food costs, German inflation is continuing at its highest level since 1993, hitting household spending.

German companies are further being hit by high raw material costs, and in addition to lower domestic consumer spending, concerns remain the impact of a global economic slowdown.

The high value of the euro has also been a problem over the past year, although the dollar has rallied in recent weeks, offering some respite to German exporters.

“In addition to the continued price hikes for energy and fast moving consumer goods, expectations of weaker economic development are depressing the consumer mood in particular,” said the GFK report.

GFK surveys around 2,000 consumers for its monthly consumer confidence guide.

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