"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up"
- Yasuo Yamamoto, senior economist at Mizuho Research Institute
Confidence among Japanese consumers dropped unexpectedly in December, adding to signs that people are getting more cautious about future economic performance of the world's third largest economy. According to the Japanese Cabinet Office, a gauge of consumer, which accounts for a majority of overall economic activity, tumbled to 39.2 last month, down from 39.4 in November. Analysts, however, expected a reading of 40.7. Japan's consumers are pessimistic about the economy since May 2006, when the reading last time reached a 50 level threshold, which separates optimism from pessimism.
"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. "But in order for growth to accelerate even further, capital expenditure needs to improve. Unfortunately, capital expenditure is likely to remain weak."
"There have been signs of the economy bottoming out," Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute. "It would not be surprising to see the decline in the coincident index coming to a halt in the near term."
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