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Japan's economy shrinks in second quarter

Business Materials 13 August 2008 06:56 (UTC +04:00)

Japan's GDP contracted in the second quarter as the world's second largest economy succumbed to high oil prices and the prospects of a global slowdown, the AP reported.

Japan's gross domestic product, or the total value of the nation's goods and services, in the April-June period shrank at an annual pace of 2.4 percent, a sharp downturn from 4.0 percent growth registered in the first quarter, the Cabinet Office said Wednesday.

The last time GDP turned negative was in April-June 2007.

On a quarterly basis, GDP contracted 0.6 percent from a 0.8 percent increase in the January-March period.

The data provided further evidence that Japan has ended its six-year expansion, and may now be perilously close to a recession.

Private consumption, which accounts for more than half of real GDP, dropped 0.5 percent from the previous quarter.

Two main drivers of Japan's six-year economic recovery - business investment and exports - also weakened as expected.

Private-sector investment in factories and equipment fell 0.2 percent, while overall exports of goods and services slid 2.3 percent.

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