Japan enters recession but no yen printing yet!
TOKYO, Japan - April 28, 2011 - Japan has entered a recession, according to its central bank, but its policy-makers held off from further measures to boost growth despite the devastating impact of last month's earthquake and tsunami.
In its first forecasts since the crisis, the Bank of Japan judged that gross domestic product grew 2.8% in the year to March, down from a 3.3% prediction in January. That implied two quarters of falling economic activity, which represents a recession.
With a national debt twice the size of its economy and an ageing population, Japan was struggling even before the March 11 earthquake damaged much of the infrastructure along its northeast coast and power outages forced companies to shut down production.
The Bank also slashed its forecast for growth in the current fiscal year from 1.6% to just 0.6%. However, it expects the recovery from the quake to gain ground in the autumn and upped its forecast for growth in the next year from 2%-2.9%.
As expected, the nine-member board kept interest rates around zero and held off from more monetary easing.
Kiyohiko Nishimura, the Bank's deputy governor, did propose increasing the asset-buying programme by 5 trillion yen (£36bn) to 45 trillion yen but was outvoted.
