Japan may soon slip into recession but it will be a shallower trough than those of the past decade, with Japanese companies and banks in much better shape to weather crumbling consumption and export markets.
Having cleaned up their balance sheets after the collapse of an asset bubble in the 1990s, Japanese banks have largely avoided the havoc wreaked on US and European lenders by the global credit crunch. Factories, having cut costs, look more resilient.
So this recession will likely be an imported phenomenon, with consumers and companies hammered by surging energy and commodity costs and exports markets in the United States and Europe shrinking under the weight of the credit squeeze.
And after its longest postwar expansion, analysts expect that the Japanese economy will rebound faster than it did from the slumps of 2001 or 1998.
"In both cases, the financial system couldn't support the economy," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
"But it's different this time," pointed out Kumano.
"When you have a financial crisis, the seriousness of the slowdown will be totally different."
That view is widely held. A Reuters poll last week showed economists expect Japan's economy to grow 1.3 percent in the current fiscal year to March. The economy shrank 1.5 percent in 1998/99 and 0.8 percent in 2001/02.
Despite the full-year forecast, the risk of recession has increased.
Source:China Daily/Agencies
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