Recession big in Japan as economy slumps 4%

On World Metrology Day, Japan's bean-counters have worked out that they're even worse off than we are.

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Last Updated: 06 Nov 2012

Even the UK’s current economic woes pale in comparison with those of Japan, judging by official figures released today: the world’s second-largest economy suffered a record 4% decline in the first three months of 2009, which is equivalent to an eye-watering 15.2% drop on an annualised basis. It’s the fourth quarter in a row that output has fallen, as demand for Japanese products has plummeted at home and abroad.  But with signs that the situation is finally starting to stabilise, Japan’s only consolation is that this might be as bad at it gets. And at least the politicians don’t have an expenses row to distract them…

Since Japan actually makes stuff, rather than relying heavily on the banking and property sectors (like us), some thought it might weather the worst of the storm. But in practice, the global recession has stymied demand for its products – and like Germany, Japan has seen its exports hammered as a result (there was a 26% drop in the first quarter alone). In recent months, its manufacturing firms have been desperately cutting production in the face of waning demand, which has helped to push GDP down at a record rate. However, the good news is that companies appear to be clearing their inventories at last; once production falls back into line with demand, the sector should start to recover.

Then again, that’s by no means Japan’s only problem. Like the UK, it’s likely to see rising unemployment and a growing threat of deflation this year, which will probably depress domestic demand. And that’s not to mention its more ingrained problems, like its huge public debt (which dwarfs even Alistair Darling’s ever-increasing IOU) and ageing population. At least the Japanese should be used to such economic woes, after the lost decade of the 1990s (described evocatively by John McLaren in a recent issue of MT).

Just measuring all this stuff is going to keep some people very busy in the next few years. So today is perhaps a good time for us to be celebrating World Metrology Day – the anniversary of the first international agreement about units of measurement. This ‘Convention de Metre’ treaty of 1875 ultimately led to a single system for measurement (SI units), which has enabled all sorts of scientific, technological and economic advances, not to mention a load of market traders moaning about the fact they can no longer sell us a pound of bananas.

And if nothing else, at least standard measurements allow us to compare our output figures favourably with the likes of Japan...

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