Japan - world's No. 2 economy - in recession

Government says country's gross domestic product contracted at 0.4% annual rate in third quarter.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

11 economies in decline 11 economies in decline 11 economies in decline
A financial crisis that began when the U.S. housing bubble popped has engulfed countries large and small around the world.

TOKYO (CNN) -- Japan -- the world's second-largest economy -- is in a recession, government officials announced Monday.

Japan's Cabinet Office confirmed that its economy shrank another 0.1% in its third quarter, following a 0.9% drop in the second quarter. The country's gross domestic product -- second to the United States -- has fallen by 0.4% this year, pushing Japan into its first recession since 2001.

The financial crisis has spread to all corners of the world. In Europe, the pain has been particularly acute. The European Union on Friday officially declared that the 15-nation group had entered into a recession, with its gross domestic product declining 0.2% for the second straight quarter.

Major indexes around the globe have plummeted over the last two months amid the economic gloom. The Russian stock market has lost 65.5% of its value since the start of the year. Stocks in Japan and the U.S. have been equally hard hit, falling 42% and 33%, respectively.

Japanese Prime Minister Taro Aso was among the Group of 20 world leaders that met in Washington over the weekend, unveiling a set of sweeping plans aimed at tackling the ever-expanding economic crisis, which has roiled financial markets worldwide.

The G-20 members at the historic two-day meeting managed to find some common ground on both the causes of the crisis and areas that need to be fixed.

The plans include interest rate cuts by central banks around the globe or potential economic stimulus packages, and boosting developing countries struggling under the weight of the crisis.

Japan's recession announcement was not unexpected. Part of the problem is the strong yen, which skyrocketed in recent weeks as turmoil in the world's financial markets and concerns about a global recession drove investors away from high-yielding currencies such as the euro and the pound. As a result, lower-yielding currencies like the dollar and the yen surged in value, because they are considered by many investors to be a safe haven.

Since Japan is such a big exporter of goods, a more robust yen hurts profits for Japanese firms as sales from abroad get translated back into yen. The more that the yen has climbed, the worse Japan's stock market has performed, which has resulted in a ripple effect on European and U.S. exchanges.

After an early selloff Monday, Japan's Nikkei 225 stock index rebounded. The index finished the session up nearly 1%.

-- CNN's Junko Ogura and Kyung Lah contributed to this report. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.