Now something completely different: Tokyo warns of double-dip recession
By Daniel at 28 November, 2009, 8:56 pm
Fears that figures suggesting an economic recovery may have been a false dawn were intensified yesterday when Japan’s Prime Minister sounded an official alarm that the country risked falling into a “double-dip” recession.
With the bedrock of Japan’s export industry ravaged by both a recent plunge back into deflation and the soaring yen, Yukio Hatoyama said that “measures are required so that the economy will not fall into a double-dip recession”.
His comments are expected to spark alarm as other governments have quietly begun to acknowledge the possibility that the worst may not be over.
However, analysts said that the warning may have been more political than anything else: the Japanese economy is probably in better shape than the Government is yet happy to admit. After only three months in power, Mr Hatoyama faces the grim prospect of having to extend stimulus measures for months to come, and then work out a way to pay for it all that does not plunge the country into deeper debt.
The threat of a double-dip recession, said analysts, may be the “scare tactic” needed to push through the necessary extra budget, which may run as high as 11,000 billion yen (£77 billion), and could require unpopular tax increases to fund.
http://business.timesonline.co.uk/tol/business/economics/article6934231.ece
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