Japan’s economy contracted more than what economists forecast in the fourth quarter as exports slid on weakness in global demand and strength in the yen.
Gross domestic product decreased by 2.3 percent during the period from a year earlier, much worse than 1.4 percent contraction that analysts had forecast. Compared with the previous three months, the economy shrank by 0.6 percent.
The data comes amid concerns of a slowdown in the global economy, along with the ongoing debt crisis in the eurozone. The crisis has hurt confidence and dented consumer demand in Europe, which is a key market for Japanese goods.
To make matters worse, Japanese companies have had to deal with a strong yen. The nation’s currency climbed to a postwar record of 75.35 per dollar on Oct. 31, making exports less competitive. The yen was trading at around 77.70 to the dollar on Monday, after the Greek parliament's approval of an austerity package bolstered the euro.
Personal consumption, which accounts for roughly 60 percent of the GDP, rose 0.3 percent, compared with an expected rise of 0.9 percent.
Last week the Parliament passed Prime Minister Yoshihiko Noda’s 2.5 trillion yen ($32 billion) recovery package from the earthquake and tsunami, the fourth supplementary budget since the disaster.
The International Monetary Fund estimates that Japan’s economy will grow 1.7 percent in 2012, compared with a likely 1.8 percent expansion for the U.S. and an estimated 0.5 percent contraction for the euro area.