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TOKYO Dec 30 Japan's gross domestic product has likely shrunk in the October-December quarter by 12.1 percent on an annualised basis, in what would be its sharpest contraction in 34 years, Barclays Capital said on Tuesday.
Barclays downgraded its forecast for Japan's fourth-quarter GDP due to factors such as record falls in exports and industrial output in November, said Kyohei Morita, chief economist in Japan for Barclays Capital.
Japan, like the United States, is already in recession, with companies such as carmakers Toyota (7203.T) and Honda (7267.T) slashing output as customers close their wallets worldwide.
Data this month showed that industrial output fell 8.1 percent in November from a month earlier, the largest fall on record, and that exports posted a record annual fall in November.
Barclays' latest forecast is for Japan's fourth-quarter real GDP to decline 3.2 percent from the previous quarter, which would translate into an annualised fall of 12.1 percent, Morita said. JPGDR1=ECI
That would be the biggest contraction in GDP since a 13.1 percent annualised drop in January-March of 1974, when Japan was reeling from the early 1970s oil shock.
The situation may be even worse now, Morita said.
Japan's GDP expanded in the quarters before and after the first quarter of 1974, whereas Japan may now be facing five straight quarters of contraction because GDP is also likely to shrink in January-March and April-June of next year, Morita said. Japan's GDP fell in both the April-June and July-September quarters of this year.
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