(CEP News) - Japanese fourth quarter GDP is expected to print negative for the third time in a row - this time forecast to drop steeply, as the recession in Japan spreads to several sectors.

“So far, so bad. However, an awful set of numbers should not come as too much of a surprise given the weakness of so much of the incoming data,” said Julian Jessop, economist with Capital Economics.

Economists expect GDP to fall by 3.1% quarter-over-quarter, after a 0.5% drop in the third quarter. On an annualized basis, GDP is expected to post an 11.6% fall.

Jessop said exports slipped 15.0% in the fourth quarter, and will subtract heavily from preliminary GDP results. He said consumer spending dropped off as well.

Kyohei Morita, economist with Barclays Capital said it is certain that the Japanese recession has entered a new phase where it is broadening out. Falling exports, low household spending, and increasing difficulty for businesses to obtain loans.

Morita expects GDP will contract more sharply than the consensus by 3.6% - marking the steepest contraction since World War II.

He said the downside risks are “mounting¥ We therefore believe it is best to prepare for two consecutive quarters of double-digit annualized contraction.”

Jessop was slightly more upbeat. He said leading indicators are weak, but not in a free fall. “The Japanese economy has already taken a very large hit from the world recession and there should not be much more bad news to come,” he said.

Japanese GDP will be released on Sunday at 6:50 p.m. EST.

By Megan Ainscow, mainscow@economicnews.ca

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.

Posted in Categories: Economy, Releases.

Subscribe by RSS Subscribe by Email