A raft of dismal economic data is sending Japan, the world's secondlargest economy, further into recession. The gloom has regionalpartners increasingly worried. There is concern in Australia, whereJapan is a key trading partner.
Japan's bleak economicoutlook has sent shares on the Nikkei index falling by more than 3percent, caused by a Thursday decline on Wall Street, weak economicdata and pessimistic forecasts of corporate earnings.
Earlyofficial estimates have said that industrial production in Japan dippedby a record 9.6 percent in December, and January's performance islikely to be just as bad.
Japanese unemployment suffered its biggest jump in 40 years while household spending was down for a tenth month in a row.
The gloomy news in Japan seems relentless.
Thecountry's second-biggest car maker, Honda, has been forced to slash itsannual profit forecast by more than half because of rising costs, astronger yen and falling sales. Reports in Tokyo have said that motorgiant Toyota is also in financial trouble and expects to record a lossin the current fiscal year.
The rapid worsening of theJapanese economy and in particular its manufacturing sector is bad forAustralia's once mighty minerals and energy producers, which are facingfalling prices and demand.
Japan bought $22 billion worth of Australian goods last year, and is the country's main export customer.
Theglobal slowdown has begun to bite on the Australian economy, and thegovernment is considering a second multi-billion package to stimulatedomestic demand.
Heather Ridout from the Australian IndustryGroup is calling on accelerated tax cuts for low income earners,despite reservations at the International Monetary Fund.
"We'recalling for tax cuts to be brought forward, which are alreadyscheduled, for the low payed," Ridout said. "The low payed are thosethat spend it. The issue with the IMF's view is that if you give taxcuts to the whole income cohort, that is, to high payed as well as lowpayed, often the higher payed people save it."
Asian stockmarkets remain nervous amid so much gloom. South Korea's Kospi indexlost ground along with markets in Singapore and Malaysia.
Australian shares were up slightly.
HongKong's Hang Seng was boosted by speculation that China will cutinterest rates over the weekend and posted a modest rise of just under1 percent.
Markets in mainland China are closed all week for the Lunar New Year.
