Japan’s Economy Shrinks Most Since 1974 Oil Shock

[Joanne98]

Feb. 16 (Bloomberg) -- Japan’s economy shrank the most since the 1974 oil shock last quarter amid an unprecedented collapse in exports and production.

Gross domestic product fell at an annual 12.7 percent pace in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

Global demand for Corolla cars and Bravia televisions evaporated last quarter as credit markets froze and world growth sputtered. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which are forecasting losses -- are firing thousands of workers, heightening the risk a slump in household spending will prolong the recession.

“The best we can expect for this year is to see the collapse stop,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. For Japan to recover “we’ll need the U.S. and Chinese economies to take off first.”

The yen traded at 91.50 per dollar as of 9:00 a.m. in Tokyo compared with 91.76 before the report was published.

The quarter was defined by the fallout from the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc., which set off a credit crisis that erased more than $14 trillion from global equity markets and paralyzed world trade. The meltdown also spurred a 14 percent surge in the yen against the dollar that’s eroded earnings for exporters already struggling with record declines in overseas sales.

http://www.bloomberg.com/apps/news?pid=20601087&sid=al6PtfluFv0c&refer=home