Page last updated at 07:57 GMT, Monday, 17 November 2008

Japanese economy now in recession

A pedestrian passes before a share prices chart in Tokyo
This is Japan's first recession since 2001

Japan's economy has entered its first recession since 2001 after shrinking by 0.1% in the third quarter.

The world's second-biggest economy had previous shrunk by 0.9% in the April to June quarter.

"The downtrend in the economy will continue for the time being as global growth slows," said Japanese Economy Minister Kaoru Yosano.

The eurozone officially slipped into recession last week, and the US is expected to follow.

"We need to bear in mind that economic conditions could worsen further as the US and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings," Mr Yosano added.

In Osaka, Japan's second biggest city, some companies are looking to the heavens for help
Duncan Bartlett, BBC correspondent

The benchmark Nikkei share index fell on opening after the growth data was released, but it later rebounded and closed up 0.7%. The Nikkei has lost a quarter of its value since the beginning of October.

Growth in Japan has been hit by the global economic slowdown which has curbed demand for Japanese exports.

"The risk of Japan posting a third or fourth straight quarterly contraction is growing, given the fact that we can no longer rely on exports," said Takeshi Minami, chief economist at Norinchukin Research Institute.

Japan's economy had experienced its longest period of economic growth since World War II until the sub-prime crisis started a year ago.

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