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Japanese Economy Now in Recession

World markets were mostly lower, amid news that Japan is the latest nation to slip into recession and projections of continued negative economic growth and higher unemployment in the United States. From Washington, VOA's Michael Bowman reports.

Japan, the world's second-largest national economy, is in recession for the first time since 2001. Figures from Tokyo show the economy contracting at an annual rate of 0.4 percent in the third quarter, after plunging 3.7 percent in the second quarter of the year.

From 2002 to 2007, Japan had enjoyed an average growth rate of just more than 2 percent a year.

Japanese Economy Minister Kaoru Yosano says according to quarterly results, "we can understand the economy has continued in a recessionary phase." He added the global economy is expected to slow down and downward movement in Japan is expected to continue.

Analysts say Japan's export-oriented economy has been hurt by the global slowdown, but the country is no longer hobbled by deep-seated structural financial ills that ground economic expansion to a halt for much of the 1990s.

Last week brought news that Germany had officially entered a recession. The United States is almost-universally expected to show a second consecutive quarter of negative economic growth for the end of the year, meeting the technical definition of a recession.

In its latest forecast, the Washington-based National Association for Business Economics projects the U.S. economy will get worse before it gets better.

"Our panel expects the economy to contract at a 2.6 percent rate in the fourth quarter, and continue to decline heading into 2009," said NABE President Chris Varvares. "Our panel sees the unemployment rate rising to 7.5 percent, from the current 6.5 percent, by the end of next year; that overall consumer spending after adjusting for inflation will decline 0.2 percent next year. And that is the first time that we have seen an outright decline in consumer spending since 1980."

U.S. financial giant Citigroup announced major job cuts totaling more than 50,000 employees, reflecting continued woes in the American labor market.

Investor Mark Mobius of Franklin Templeton Investments says he is hopeful that aggressive steps taken by numerous governments and central banks to unfreeze credit and spur economic activity will ultimately succeed.

Speaking on Bloomberg television, Mobius was asked if he believes the worldwide economic downturn will be long lasting.

"No, I do not think so, because of the measures that are being taken by the U.S, Europe, and other major countries around the world. I believe that with the amount of money that is being pumped into the global system, this [recession] will be rather short-lived."

Mobius said his firm is aggressively buying stocks at Monday's depressed price levels in anticipation of an eventual economic upswing.

Across Asia and Europe, most major financial markets were lower Monday.

Wall Street's Down Jones Industrial Average began the day with triple-digit losses, but crossed into positive territory in midday trading.