Japan's economy weaker than estimated

A rising value of the yen and global problems has resulted in the contraction of the Japanese econom

Japan's economy contracted more severely in the second quarter of this year than was initially estimated, according to revised government data.

The data revealed that the Japanese economy had contracted at an annual rate of 2.1 per cent over the second quarter, compared with the previous estimate of a drop of 1.3 per cent.

This has raised concern over the strength of the Japanese economy, as the rate of the yen continues to rise amidst heightened uncertainty about the global economy.

Japan's economy has been shrinking steadily over the last three years, and its recession was exacerbated by the colossal damage caused by the tsunami and earthquake which hit earlier this year. The natural disasters damaged infrastructure and had a severely negative effect on factories in the affected areas, some of which were forced to halt production altogether.

The waning global economy has also impacted upon businesses in Japan, with new figures revealing that there has been a decrease in expenditure and overall investment by firms. Data released by the Ministry of Finance last week showed that capital expenditure by companies, investment in plants and machinery, has experienced a fall of 7.8 per cent in the second quarter from a year earlier.

The increasingly high value of the yen has added to Japan's problems, as its export market has suffered as a result of the strong currency.

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