The Japan in a recession economy

 struggles to the Japan to restore to production lines damaged in the Japan, the third largest economy, contracted sharply in the first three months of the year, after a tsunami and the earthquake caused damage in March.

Gross domestic product (GDP) decreased 0.9% in the first quarter, the Cabinet office said. This meant that the annualized contraction rate is 3.7%.

The Japan is now in recession after two consecutive quarters of decline.

Analysts say consumption and exports have been worst affected.

The contraction was greater than expected with most of the forecasts of the annualized rate of about 2%.

"The Japanese economy should remain low for the moment," said the Minister of the Japanese economy Kaoru Yosano Thursday.

However, Mr Yosano said that alleviate the constraints of supply and demand for reconstruction would probably develop.

"The economy a force is necessary to bounce," said Mr Yosano.

Consumers pessimistic

Naomi strategies Japan Fink said the most worrying part of data of today has been the decline in consumotion of 0.6%, as people reduce their expenses after the earthquake.

Private consumption represents about 60% of the Japanese economy.

Roland Buerk reports on the Japan attempts to deal with the loss of power caused by the earthquake in Tokyo

"It was already soft in the last quarter of 2010," said Naomi Fink, Japan strategist at Jefferies.

The earthquake, however, moderated in addition a sense.

The consumer confidence index fell to 33.1 in April, according to the Cabinet Office.

A reading below 50 suggests the pessimism of consumers.

"On mars by the decline in retail sales and household spending, consumption should be one of the largest contributors for the first quarter, negative growth", said Mrs. Fink.

Damaged supply chains

The second largest component of the world's third largest economy is trade.

Exports of 13.5% and imports of 12.7% of GDP in 2009.

The massive quake and the tsunami that devastated exports, while imports costs increased due to high prices for raw.

Trade surplus fell by 34.3% in March from the same month a year ago.

"A question on the side of the export is the continuous fight to restore damaged production and strings, lines of supply", said Mrs. Fink of Jefferies.

"On import, the increase in demand for fossil fuels, to offset the decline in the supply of nuclear energy, is unlikely to fade any time soon", she added.

Application of reconstruction

Once the rebuilding gathers momentum, however, it should have a positive impact on the economy.

But it is only likely to occur towards the end of this year.

"I do expect not in the second quarter, positive growth", said Mrs. Fink.

The Central Bank begins its meeting in two days from Thursday to discuss monetary policy.

"The economic strength of the Japan is gradually decreasing," Bank of the Japan (BOJ) Governor Masaaki Shirakawa said a meeting Tuesday of the Parliamentary Committee.

Analysts say that this indicates that the Central Bank will paste his policy monetary ultra-loose.

"The Bank of the Japan is likely to refine its existing policies," said Mrs. Fink.

The Bank injected billions of dollars in the financial system to stabilize the economy since the severe earthquake.

The Bank of Japan should also maintain the unchanged rates to the lowest level, in the range 0.0% to 0.1% to help stimulate the economy.