"These are pre-Abe numbers. He was only prime minister for about the last week of the quarter"
- Takuji Okubo, chief economist at Japan Macro Advisors
The world's third largest economy shrank unexpectedly in the last quarter of 2012, falling deeper into the recession, while the Bank of Japan kept monetary policy steady and even raised its assessment of the economy. Japan's gross domestic product dropped an annualized 0.4%, following a revised 3.8% fall in the previous quarter, while on a monthly basis the economy shrank by 0.1%. The prolonging of Japan's recession into a fourth quarter shows that benefits from a weaker Yen and government's pledge to introduce bold measures soon are both not working yet. As widely expected, the central bank maintained its overnight call rate target at a range of zero to 0.1% by a unanimous vote and decided not to expand its asset-purchase and lending programme.
"These are pre-Abe numbers," said Takuji Okubo, chief economist at Japan Macro Advisors who formerly worked at Goldman Sachs Group Inc. "He was only prime minister for about the last week of the quarter. We will see a fairly big pick up this year, led by exports recovering on the weaker yen."
"The biggest reason for the decline in gross domestic product (GDP) is external demand was weak and domestic demand did not recover as quickly as we thought," said Shuji Tonouchi of Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
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