Japan’s GDP Shrinks 12.7%, Most Since 1974

Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, as recessions in the U.S. and Europe triggered a record drop in exports. GDP fell for a third straight quarter 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. Exports plunged an unprecedented 13.9 percent from the third quarter as demand for Corolla cars and Bravia televisions collapsed amid a slump that the Group of Seven nations said will persist for most of 2009. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which forecast losses -- are firing thousands of workers, heightening the risk a decline in household spending will prolong the recession. Yosano said the government has no plans to compile additional stimulus measures before next fiscal year’s budget is passed. Parliamentary gridlock has blocked the passage of Prime Minister Taro Aso’s 10 trillion yen ($111 billion) package, helping his popularity slide ahead of elections due by September.