High yen and Thai floods hit growth

Floods in Thailand and a strong yen did heavy damage to Japan as the world's second-biggest economy floundered in the final quarter of 2011, official figures showed yesterday.

Output shrank 0.6 per cent in the October-December quarter – twice as bad as expected – dealing a blow to Japan's efforts to fight back from the tsunami which devastated the north-east coast and caused a nuclear disaster nearly a year ago.

Major manufacturers such as Sony and Honda were hit badly before Christmas by a drop in export demand and flooding in Thailand, which hit production at their factories there.

The setback – which came against a backdrop of global growth woes – came just as many exporters appeared to have recovered from last March's earthquake and tsunami.

A strong yen also hampered Japan, thwarting efforts to repatriate funds to rebuild following the disaster and prompting emergency currency interventions to weaken the Japanese currency last year.

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