S'pore First In Recession, Last to Announce Rescue Measures

[Dennis Ng]

Japan is in recession as well.

Singapore was the first country in Asia to announce that we are in a technical recession. It seems like Singapore always wants to be No. 1.

However, PAP has yet to announce any measures to help Singapore...while many other countries have done so, including China and Japan. They just announced that they will make the announcement in Jan 2009, hopefully, we are not too late in announcing Rescue measures. Not sure what happens to our world-acclaimed efficiency.

Cheers!

Dennis Ng

Nov. 17 (Bloomberg) -- Japan's economy, the world's second largest, contracted more than economists expected in the third quarter, confirming it entered its first recession since 2001 as companies cut back spending.

Gross domestic product fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would rebound 0.1 percent after shrinking a revised 3.7 percent in the previous period.

The slowdown that last month forced Prime Minister Taro Aso to propose a stimulus package is likely to worsen as export demand weakens and companies respond with investment cuts and layoffs. Toyota Motor Corp. and Canon Inc. slashed profit forecasts in the past month as U.S. consumers clamp down and the yen's rise against the dollar erodes the value of sales.

``The economy is still so sensitive to the global business cycle. That's the problem,'' said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo. ``A long as the global economy keeps sinking, Japan will probably experience a deep recession.''

The yen traded at 96.29 per dollar as of 9:02 a.m. in Tokyo from 96.09 before the report was released.

The Bank of Japan last month cut its key interest rate to 0.3 percent, the first reduction in seven years. Governor Masaaki Shirakawa and his colleagues said the global downturn and the yen's 9.4 percent advance against the dollar since September have created a ``severe'' earnings environment for Japanese companies.

Still, Japan's economy will probably suffer less than its biggest counterparts after its companies shed debt and streamlined labor forces following the bursting of the property and asset bubble in the early 1990s. The world's second-biggest economy will shrink 0.1 percent next year, according to the Organization for Economic Cooperation and Development, less than the 0.9 percent and 0.5 percent contractions in the U.S. and Europe.

Approval Ratings

Aso, whose approval ratings have tumbled since he took office in September, last month said the government will spend 5 trillion yen ($52 billion) to help households and small businesses weather the crisis. The plan will put pressure on a government budget already strained by debt that exceeds 180 percent of gross domestic product, former Economic and Fiscal Policy Minister Hiroko Ota said last week.

Toyota, which makes more than three-quarters of its sales abroad, forecast profit will fall this fiscal year by almost 70 percent. The carmaker will delay adding production capacity at a domestic plant that makes Lexus models, the Nikkei newspaper reported this month. It will also lay off 3,000 workers by the end of March.

The ratio of jobs to applicants has fallen for eight months and the deteriorating profit outlook for companies is also putting pressure on wages. Winter bonuses, which typically account for about 10 percent of a fulltime worker's annual pay, will fall 2.9 percent this year, the Nikkei reported last week.