Japan’s economy shrank at its fastest pace since World War Two in the first three months of this year.
Gross domestic product contracted 3.8 percent from the previous quarter. Compared with the same period a year earlier, GDP was down by a record 14.2 percent. The decline was slightly less than economists had predicted as capital expenditure and inventories fell at a slower pace than the government initially estimated. However, the hope among economists is that the worst is over and a slow fragile recovery is underway in the current quarter as the effects of a massive government stimulus package start to be felt. In addition companies are gingerly increasing output following drastic cutbacks in production prompted by a huge drop in exports. But growth is not likely to accelerate much as overseas demand will probably not be strong enough to spur substantial business investment. Falling wages and a rising jobless rate will also have a negative impact.