The economy contracted sharply in the first quarter, veering back into recession as factory production and consumer spending wilted in the aftermath of the March 11 earthquake and tsunami.
Real gross domestic product — a measure of the value of all goods and services produced domestically — shrank at an annualized rate of 3.7 percent in the January-March quarter, following a revised 3 percent drop the previous quarter, the Cabinet Office said Thursday.
The median forecast of 23 economists surveyed by Bloomberg News was for a 1.9 percent drop.
The result marks the second straight quarter that the economy has lost steam.
While there is no universally accepted definition of a recession, many economists define it as two consecutive quarters of GDP contraction. Others consider the depth of economic decline as well as other measures, such as unemployment.
…Martin Schulz, senior economist at Fujitsu Research Institute, said there is “no doubt” that recession has returned. More surprising is just how quickly the economy crumpled, he said.
The latest GDP report includes just 20 days following the disaster, but “the impact is huge,” said Schulz, who had expected to see most of the economic fallout in the second quarter.
The March disaster hit an economy that was already weighed down by years of deflation and subdued consumer spending and that was reliant on exports for growth.
The economy will probably contract at a 3.3 percent annual pace this quarter, and then resume growth the next two quarters, according to the average forecast of 43 economists in a survey by the government-affiliated Economic Planning Association released Monday [refer to the wrong forecast of “economists” in the 3rd paragraph, above – Zuo Shou].
“The negative economic impact from the disaster will be on full display during the second quarter,” Hiroshi Watanabe, a senior economist at the Daiwa Institute of Research, said before the report. “This recession may be deep, but short.”
…The nation’s GDP shrank for four straight quarters during the global financial crisis and contracted for three straight quarters in 2001…
Edited by Zuo Shou
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