S&P sees worst recession for Japan since WWII

[February 26, 2009]  TOKYO (AP) -- Japan's economy is sinking into its worst recession since World War II, international credit rating firm Standard & Poor's said Thursday.

The Japanese economy is expected to shrink 4 percent in 2009, which would be worse than the 2 percent contraction in 1998, when Japan went through its own financial crisis after the "bubble" economy burst, S&P said.

The projections underscores similar views expressed recently by other analysts as well as Japanese government officials.

"The business climate for Japanese corporations is deteriorating dramatically amid a sharp decline in demand for products," said S&P credit analyst Takahira Ogawa, noting exporters expect losses for the fiscal year through March, including Toyota Motor Corp., forecasting its first annual net loss since 1950.

Japan's gross domestic product, the value of goods and services, plunged at an annual rate of 12.7 percent in October-December, the worst since the 1974 oil shock. The outlook for the first quarter of 2009 remains dismal, and likely to be another double-digit annual-pace contraction, said Ogawa.

Japan's political stalemate, which has budget bills stuck in parliament, isn't helping.

"Government action aimed at addressing the nation's economic woes has been relatively ineffective," he said.

[Associated Press]

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