If this isn't a deflationary spiral, God help us if we see one. Consumer spending fell 0.3 percent for the quarter while housing spending was down by 6.2 percent. The only positive number was the 3.6 percent rise in public investment works as a result of the fiscal stimulus packages announced by the government. But data from the Ministry of Finance raises the longer-term question of how such expenditure can be sustained. And even with the stimulus packages, the slump is beginning to take its toll on major Japanese corporations.
More companies are to go the same way.
The WTO said the slump in Asia had hit commodities hard with oil prices down by 30 percent and non-fuel commodity prices reduced by 15 percent since the crisis began. Japan's exports were down 8.5 percent in the first nine months of the year with imports falling by 19 percent. Direct references to the IMF and US Treasury were cut from the final report but there was no doubt that both organizations were blamed for turning an investor panic into a full-scale slump. Delivering the report, World Bank chief economist Joseph Stiglitz said the high interest policy imposed on Korea, Thailand and Indonesia, which was supposed to restore investor confidence, had in fact deepened the crisis. Stiglitz estimated that up to 75 percent of Indonesia's firms were now bankrupt.