Japan is projected to stay mired in recession in 2009 after posting negative growth for 2008 as the export-led economy is battered by plummeting demand overseas and the yen's strength against other major currencies.
Most economists forecast the economy will take a sharp downturn in the first half of 2009 and gradually pick up when the U.S. economy hits bottom in the latter half of the year. Tokyo will also experience a revival of deflation as crude oil prices continue to dive, they say.
Following "the steepest decline in Japan's economy in over 60 years," as described by Prime Minister Taro Aso, economists predict Japan won't be able to get back to where it was before the global financial crisis struck until as late as 2011. The collapse that began with the U.S. housing market erupted into a full-blown economic crisis with the bankruptcy of U.S. investment bank Lehman Brothers in September.