Japan's economy is in serious condition. Despite years of recovery efforts, its vital signs continue to worsen. Gross domestic product in July through September contracted at an annual rate of 2.2 percent, posting two straight quarters of negative growth -- a condition that is technically defined as recession. With the U.S. economy also in recession, a global downturn cannot be ruled out.
Economic conditions here appear to have further deteriorated since October, due largely to the enervating effect of the Sept. 11 terrorist attacks on the United States. The Bank of Japan's "tankan" survey, released Wednesday, showed a continuous decline in business confidence. The economy is likely sinking into its worst crisis since the end of World War II.
A GDP decline for all of fiscal 2001, ending next March, is a certainty. Another yearly decline is likely for fiscal 2002. If that happens, it will be the first time since the end of World War II that Japan has experienced two consecutive years of negative growth. There are already signs of a deflationary spiral, raising the possibility of larger companies going bankrupt in depressed industries like distribution and construction.