Japan in recession, shares slide, retail sales rise: Economy roundup

Another one of the world’s biggest economies is in recession, the sharemarket keeps falling, and the G20 summit failed to come up with anything really concrete – welcome to another week of the global financial crisis.

Another one of the world’s biggest economies is in recession, the sharemarket keeps falling, and the G20 summit failed to come up with anything really concrete – welcome to another week of the global financial crisis.

Japan – the world’s second largest economy – has announced it is officially in recession this morning, with the island nation’s GDP shrinking 0.1% in the July-September period, following a 0.9% reduction in the previous quarter.

Japan follows Germany and New Zealand in announcing a recession. The United States is also widely thought to be in recession, but no official data will be released until January.

Meanwhile, the world leaders and finance officials of 20 countries met over the weekend in Washington to discuss battle plans for dealing with the global financial crisis.

“We are determined to enhance our co-operation and work together to restore global growth and achieve needed reforms in the world’s financial systems,” the group of 20 countries, including Australia, announced after the summit.

The group adopted a six-point plan to tackle the economic crisis, including ramping up market regulation practices, new trade deals and further stimulus packages.

The announcement comes as Finance Minister Lindsay Tanner said the Australian Government is considering further stimulus packages if the economic climate worsens.

“The possibility of further spending stimulus really relates to the prospect of the news from the international economy getting even worse… I certainly hope there won’t be a need for further stimulatory action, but we can’t rule that out,” he told ABC Radio.

The Government’s $10.4 billion stimulus package, due to take effect next month, has reduced the federal budget surplus from $21.7 billion to $5.4 billion for 2008-09.

Meanwhile, the Australian sharemarket dropped 2% in early morning trade following disappointing results on Wall Street late last week. The benchmark S&P/ASX200 index was down 103.6 points or 2.77% to 3645.1 at 12.15 AEDT.

NAB suffered a 6.7% drop to $18.47, while Commonwealth Bank shares fell 6.5% to $30. The dollar has also jumped 0.38% to $US64 cents.

The only big winner of the morning was Coca-Cola Amatil, which jumped 17% to $9.65 following the announcement brewer Lion Nathan has made a $7.7 billion bid for the group.

But while the sharemarket is falling, retail sales continue to grow. Data from the Australian Bureau of Statistics shows retail turnover increased by 0.5% in the September quarter.

Food retailers were the big winners, increasing 1.2%, while department stores experienced 0.8% growth.

But the household goods sector was hit hard, falling 0.4%, while cafes, restaurants and takeaway food services suffered the biggest decline at 0.6%.