Warning: Japanese Economy Faces Its Longest Period Of Contraction Ever

Japan's gross domestic product contracted much more rapidly in the third quarter than initially thought, underscoring the weakness of the world's second largest economy at a time of international financial turmoil.

Revised gross domestic product data released on Tuesday showed a quarter-on-quarter fall of 0.5 per cent for the three months to September, compared with a preliminary estimate issued last month of a 0.1 per cent decline.

On an annualised basis, the third quarter contraction - which put Japan officially into recession - is now estimated at 1.8 per cent, rather than 0.4 per cent as previously.

While the downward revision was worse than many economists expected, Japanese stock investors greeted it calmly, with the benchmark Nikkei index actually rising slightly in morning trade.

However, the revised data are likely to fuel pessimism about the prospects for the Japanese economy.

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