Japan in danger of recession, says Goldman
TOKYO - JAPAN'S tepid economy is in danger of following the United States into a recession this year, economists at Goldman Sachs said on Thursday.
Goldman's Japan economists said in a note to clients that the probability of a recession in the world's second-largest economy was 50 per cent, forecasting slow growth in the first half of the year as emerging market economies cool.
On Wednesday, Goldman's US economists predicted a recession this year due to the housing market's tumble and weaker consumer spending, predicting the Federal Reserve would cut overnight rates to 2.5 per cent from the current 4.25 per cent in response.
A recession is usually defined as an economy contracting over at least two straight quarters.
Goldman cut its forecast for growth in the Japanese economy this year to 1 per cent from 1.2 per cent after it said the US economy would shrink in the second and third quarters.
Goldman also said it expected the Bank of Japan to keep rates on hold at 0.5 per cent this year. Previously, it expected a rate rise in the July-September quarter. But it believes the BOJ will resume raising rates in the second quarter of next year.
'We expect there to be extremely little room for rate hikes justified by domestic factors,' Goldman economists Tetsufumi Yamakawa and Naoki Murakami said in the note.
Financial markets see little chance of the BOJ raising rates this year, as the Fed keeps loosening monetary policy and other major central banks are cutting rates to counter a broadening global slowdown. -- REUTERS
http://www.straitstimes.com/Latest%2...ry_194853.html 
