More bad news on Japan's economy is expected on Friday. Gross domestic product data is expected to show that the Japanese economy contracted by about one percent in the April-to-June quarter.
The Japanese government is bracing itself for a tough day Friday, when it is set to unveil extremely poor economic data. It is expected to announce that the economy contracted by as much as 1.2 percent in the April-to-June quarter.
Japan Economist Matthew Poggi of U.S. investment bank Lehman Brothers says his own forecast is similarly pessimistic. "The economy is probably going to contract a little more than one percent on the quarter, with each of the private sector components of demand falling," Mr. Poggi says. "That is to say, consumption, business investment, housing investment, all likely worsened in the period."
On an annualized basis, most forecasts also show the economy contracting at a dismal rate of three-to-five percent.
Analysts warn that if the numbers are as bad as is widely expected, Prime Minister Junichiro Koizumi, who is trying to implement aggressive reform plans, could take most of the blame.
Revised figures showed that the world's second largest economy grew just one-tenth-of-one percent in the January-to-March quarter. But most analysts say that the upward revision simply postponed recession, which is defined as two quarters in a row of negative growth.
In recent weeks, Japan has been overwhelmed with bad economic and financial news. Unemployment rose to a record five percent in July, the Nikkei share average has been hovering at 17-year lows and many large firms are laying off workers.