Japan on the brink, Sony chief warns

Fears of global collapse overshadow meeting of world leaders

THE SPECTRE of a global recession, triggered by a collapse of the Japanese economy, emerged yesterday, spreading jitters through the financial markets and overshadowing a high-level meeting of the world's leaders today.

A chilling warning by the head of Sony, one of the world's largest corporations, that his country's economy was on the verge of disintegrating, came on the heels of a sequence of dismal economic news from Tokyo.

Norio Ohga, Sony president, said: "The Japanese economy is on the verge of collapsing ... If the economic situation continues to decline, we will face a long spiral of deflation. This will no doubt have a damaging effect on the world economy."

Although his words were addressed to foreign reporters - and therefore to the wider world - the message compounded a bad day for the stock and currency markets in Japan.

In a bitter personal attack, Mr Ohga compared Ryutaro Hashimoto, the Japanese Prime Minister, to Herbert Hoover, the American President who led the country into the Great Depression in 1929.

Mr Ohga's remarks, the strongest public criticism by a senior businessman of Mr Hashimoto's handling of the economy, came at the end of a grim day in Tokyo in which bad news from the business sector caused a further dive on the stock exchange. Economists also confirmed Japan was in recession.

The Nikkei share average experienced its biggest one-day fall of the year, closing at 15,702.9, a plunge of 538.76 points or more than 3 per cent. The drop followed the publication by the Bank of Japan of its quarterly survey of business confidence which revealed that morale is even lower than expected.

The Bank of Japan's "diffusion index", the difference between major manufacturers reporting favourable conditions and those experiencing hardship, was minus 31, compared to minus 11 three months ago.

"A broad-based recession is thus confirmed," said Jesper Koll, JP Morgan's chief economist in Tokyo. "Now a complete downward spiral adjustment is in evidence - corporations are adjusting down sharply their targets ... it will take at least one full year to reverse."

Mr Ohga's attack came as Mr Hashimoto was about to land in London for two days of talks with heads of government for the Asia Europe Business Forum. He has come under intense criticism from Europe and especially from the US for doing too little to stimulate domestic demand. Last week, the Japanese government announced a 16 trillion yen package of public spending while Wednesday saw the launch of the so-called "Big Bang", an ongoing programme of financial reform and liberalisation.

The "Big Bang" is intended to increase the efficiency of Japanese finance companies by forcing them to compete with foreign and domestic competitors - but before that happens, a number of weak firms are likely to go out of business.

The economic package disappointed businessmen like Mr Ohga because it contained no specifics of how the money will be spent. "The plan seems to call for more investment in the public sector," he said last night.

"However, I believe what we need now more than ever is to stimulate consumer demand." Neither measure succeeded in halting the recent downward trend of the markets.

Hopes of an export-led recovery are slim for two reasons: the Asian economic crisis has wiped out demand in South-east Asia, previously one of Japan's biggest markets; and the United States is determined not to allow its long-standing trade deficit with Tokyo to grow once again.

PROMOTED VIDEO
News
Ian Thorpe had Rio 2016 in his sights
people
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?