STEVE INSKEEP, Host: NPR's business news starts with another big economy in recession.</s>STEVE INSKEEP, Host: That economy is Japan, which is still the world's second largest, behind the United States. Japan's government formally announced a recession today. It follows Friday's announcement that Europe is also in a recession, using the common definition of an economy shrinking for two consecutive quarters. NPR's Louisa Lim has more on the news from Tokyo.</s>LOUISA LIM: Japan's economy had been enjoying its longest period of expansion since World War II. Today that officially came to an end. After seven years of growth, Japan has slipped back into recession. New figures out today showed that the economy shrank by 0.1 percent in the third quarter of the year. That translates to a drop of 0.4 percent year on year. And that's without accounting for the pandemonium that swept through financial markets in October. Masamichi Adachi, senior economist for JPMorgan Securities, outlines his predictions for the future.</s>LOUISA LIM: Definitely quite a miserable forecast is we are looking for.</s>LOUISA LIM: The government's room for maneuver is limited. Prime Minister Taro Aso has already unveiled two economic stimulus packages since late September and cut interest rates for the first time in seven years. Now the government's hobbled by its high debt and the fact that interest rates are already very low. Exporters have been hit by the Japanese currency's 13-year high against the dollar, with companies like Toyota and Nissan slashing their profit forecasts. With more misery ahead, some economists now fear Japan could be entering its longest recession to date. Louisa Lim, NPR News, Shanghai.
Japan says its economy contracted in the third quarter, the second consecutive quarter of decline, officially putting the world's No. 2 economy in a recession. Figures show that Japanese companies sharply cut spending amid the global slowdown.