Major advanced economies slide further into recession

Special Report:Global Financial Crisis

A man walks past a shop advertising a sale in Tokyo Jan. 30, 2009. The world's second largest economy is in the midst of its first recession in seven years as the global economic slowdown sharply reduced demand overseas for cars, electronics and other key exports. (Xinhua/Reuters Photo)
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BEIJING, Feb. 17 (Xinhua) -- Japan's economy shrank
at its fastest pace in nearly 35 years in the fourth quarter of 2008, joining
other major advanced economies in sliding further into recession.

Japan, which is largely driven by exports, suffered a
loss of 12.7 percent in its gross domestic product (GDP) in the October-December
period last year, a government report said Monday, blaming the worsening
situation on plunging external demand, rapid deceleration of the world economy
and a stronger yen.

Earlier in October, Japanese Prime Minister Taro Aso
had unveiled a 27 trillion yen (275 billion U.S. dollars) stimulus package to
bolster the world's second largest economy.

In December, Japan's central bank cut its key
interest rate to 0.1 percent, lowering borrowing rates to nearly zero, and
adopted new measures to pour more money into the banking system to shake off a
widening credit crunch.

These moves in some way helped promote internal
demand, but were not enough to instantly pull the export-driven economy out of
recession as international demand for made-in-Japan continues to shrink amid the
spiraling global economic crisis.

However, Japan is only part of a gloomy global
picture. Recent data indicates that the major advanced economies of the world
are slipping further into recession despite governments' efforts to stimulate
growth.

In the United States, the economy plummeted at an
annualized rate of 3.8 percent in the fourth quarter of 2008, the worst since
1982, the U.S. Commerce Department said.

According to the country's Institute for Supply
Management, economic activity in the U.S. manufacturing sector failed to grow in
January for the 12th consecutive month.

Meanwhile, consumer spending, which accounts for
two-thirds of overall U.S. economic activity, recorded an unprecedented
six-monthly decline last December, indicating that the economy has yet to hit
bottom.

The government's newly passed 787 billion dollar
stimulus plan, which U.S. President Barack Obama described as a "major milestone
on our road to recovery," is yet to be tested for effectiveness, and
presidential aides have warned consumers not to expect instant miracles.

Further, the Wall Street Journal quoted economists as
forecasting that the United States will see an annualized GDP decline of 4.6
percent in the first three months of 2009 and a 1.5percent decline in the second
quarter.

Meanwhile in Europe, flash official figures released
last Friday suggest that GDP in both the European Union (EU) and the euro zone
contracted steeply in the fourth quarter of 2008, falling for the third quarter
in a row.

The 1.5 percent GDP decline in both the euro zone and
the EU from the previous quarter is even worse than the 1 percent contraction in
the U.S. economy during the same period.

The German economy, which is Europe's biggest, shrank
by 2.1 percent in the fourth quarter last year compared with the previous one,
representing the biggest decline since the country's reunification nearly two
decades ago.

Germany's reliance on exports of goods like cars and
factory equipment have made it particularly vulnerable to the global economic
turmoil and collapsing world trade.

In Britain, the central bank predicted last Wednesday
that the country's economy could shrink as much as 6 percent in 2009 compared
with the previous year, with rising unemployment, weak consumer spending and low
investment levels threatening to further dampen output.

The economies of France and Italy declined by 1.2
percent and 1.8 percent respectively versus the previous quarter, wiping out any
illusion that the euro zone is getting off lightly amid the worldwide meltdown.

Dominique Strauss-Kahn, head of the International
Monetary Fund, recently said that leading economies are already in depression,
adding that the worst was probably still to come, urging swifter and more
determined stimulus action from governments.