Indicators fuel fear of further slump in Japan
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Your support makes all the difference.FEARS that the Japanese economy may be sinking deeper into recession mounted yesterday after economic indicators pointed to a new relapse.
Worries over the direction of the economy followed a 3.6 per cent slump in Tokyo share prices earlier this week. The deepest one-day fall this year was sparked by speculation over an early election and disagreements over policy in the governing coalition.
The diffusion index of leading indicators, which points to future developments in the economy, fell to 30 per cent in October from 33.3 per cent in the previous month and far below the 50 per cent mark associated with a stabilising economy. More worryingly, the index of coincident indicators, which attempts to reflect the economy's current performance, tumbled to 20 per cent in October from 65 per cent in September - the first slide below 50 per cent in three months. Officials of the Economic Planning Agency said this index could stay below 50 per cent in November.
The Bank of Japan issued a bleak monthly report in which it warned of a prolonged slump with no signs of recovery in sight. Although public and housing investment are buoyant, overall final demand has remained stagnant owing to a persistent decline in personal and capital investment.
Corporate confidence is sinking in line with weak production and contracting profits, the Bank said.
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