MercoPress. South Atlantic News Agency

Japan and Hong Kong officially accept they are in recession

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, so has the UK 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. 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. In Asia also another leading economy has fallen into recession for the first time in five years, Hong Kong. In the third quarter, the territory's gross domestic product contracted 0.5% on a seasonally adjusted basis, after a 1.4% fall between April and June. The government's economist, Helen Chan, said domestic demand faltered significantly in October, while exports fell to the lowest level since 2002. Hong Kong has lowered its forecast growth for 2008, from 4-5% to 3-3.5%. Last year, Hong Kong's economy grew by 6.4%. "The global financial turmoil has derailed the economic upturn that Hong Kong has enjoyed for the past four years", said Helen Chan. She added that unemployment rose marginally to a still relatively low level of 3.4%, while inflation fell significantly in the third quarter, to 4.6%.