Japan/World financial crisis

Fastest-ever output drop in November, more misery predicted

Article published on the 2008-12-26 Latest update 2008-12-29 10:48 TU

Retailers slash prices in Tokyo's Ginza district
(Photo: Reuters)

Japan's industrial production fell 8.1 per cent in November, compared to the previous month, as the global economic crisis hits the world's second-largest economy. The drop is the sharpest recorded since statistics were first released in 1953 and was much worse than market forecasts of 6.7 per cent.

Official figures also showed unemployment rising 0.2 per cent to 2.56 million, or 3.9 per cent. The figure is slightly below forecasts of four per cent but still shows 100,000 people losing their jobs and many more workers, especially those on short-term contracts, expected to join the jobless total by March.

Prime Minister Taro Aso said that he would press parliament to pass the budget which the govnernment proposed this week. It includes tax cuts, cash rebates and other reflationary measures.

"Japan should be the first country to get out of recession," Aso told a meeting of the ruling Liberal Democratic Party. "We will lead the initiative."

The Industry Ministry expects an eight per cent drop in production in December and another 2.1 per cent in January, with the car industry badly affected and exports declining due to falling international demand.

"This is an economy that really depends on its overseas markets to survive and, unfortunately nobody’s buying cars, that’s all over the world, and nobody’s buying electronic equipment, which is another mainstay of the Japanese economy," says correspondent Julian Ryall.

And, he says, the problems are likely to last some time. 

"They knew this was coming," he told RFI. "There’s not a lot they can do about it and all they’re predicting for the foreseeable future, which as at least 12 going on 18 months, is more pain.