Japan's woes grow as economy slips into recession

Japan's economy shrank in the first quarter, slipping into recession as factory production and consumer took a hit from the 11 March earthquake and tsunami.
 
Real gross domestic product - a measure of the value of all goods and services produced domestically fell at an annualised rate of 3.7 per cent in the January-March period, the Cabinet Office said today.
 
The result marks the second straight quarter of a slowdown in the global No 3 economy which slipped more than the  2.3 per cent forecast in a Kyodo News agency survey.
 
While a universally accepted definition of a recession does not exist, many economists define it as two consecutive quarters of GDP contraction while others consider the depth of economic decline as also other measures including unemployment.
 
According to Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, while there was "no doubt" about the return of recession, more surprising was just how quickly the economy crumpled.
 
The latest GDP report covers only 20 days following the disaster, but "the impact is huge," according to Schulz. He had expected to see the bulk of the economic fallout in the second quarter.
 
The Nikkei 225 stock average was down 0.4 per cent at 9,620.82.
 
The magnitude-9.0 earthquake tsunami devastated parts of the country, leaving over 24,000 people dead or missing, and wiping out entire towns in the hardest-hit areas. Damage has been estimated at $300 billion, making it the most expensive natural disaster in history.
 
The double disaster damaged factories in the region, which led to acute shortages of parts and components for manufacturers across Japan, especially automakers. But the severest impact of the disaster came from the crippled Fukushima nuclear plan that cause widespread power shortages, radiation leakage, and fears of exposure in addition of headaches faced by businesses and households.
 
Japan' factory production and consumer spending, as a result, fell the most recorded in March with exports in March taking a fall for the first time in 16 months.
 
According to Schulz the nuclear disaster showed just how much was wrong in Japan and many things that seemed stable and sure like electricity supply were not look safe at all.
 
According to Toyota Motor Corp, Japan's biggest automaker, its quarterly profit tumbled more than 75 per cent because of shortages of parts following the tsunami. As of May, the company lost production to the tune of 550,000 vehicles in Japan and another 350,000 overseas.
 
Toyota is expected to yield its top rank as the world's top-selling automaker to General Motors Co this year.
 
However, the Japanese economy was shaky even before the disaster.
 
In a historic shift, China overtook the Japan as the world's No 2 economy last year. Japan struggled to resolve a number of problems including years of deflation, a rapidly aging and shrinking population, and a massive public debt. Japanese companies had been left to rely on exports to drive growth in a bid to offset the persistently lacklustre domestic demand.