Japanese companies are slashing their investment in plants and equipment at a record pace to cope with a worsening recession in Asia's biggest economy, data showed Thursday.
Investment dropped by 17.3 percent in the three months to December from a year earlier, led by automakers and other manufacturers, the finance ministry said. It was the biggest fall since comparable records began in 2002.
Excluding spending on software, investment declined by 18.1 percent.
"The result confirmed that the Japanese economy is worsening rapidly and going though a very tough phase," a finance ministry official told reporters.
Companies suffered an 11.6 percent drop in sales in the quarter from a year earlier and a 64 percent slump in pretax profits.
Manufacturers were hardest hit, with earnings diving 94 percent.
Before the current downturn, Japan's corporate sector had been a key driver of a recovery in Asia's largest economy following the recessions of the 1990s.
But firms are now cutting back their investment in response to slumping demand and profits, raising fears that the current recession will be deeper and longer than previously feared.
Companies from Sony to Toyota Motor have been slashing jobs to cope with the slump.
Japan's economy shrank 3.3 percent in the fourth quarter of 2008 -- 12.7 percent on an annualised basis -- logging its worst performance since 1974, an initial estimate showed last month.
The business investment figures will be used to calculate revised gross domestic product figures due on March 12.
Investment dropped by 17.3 percent in the three months to December from a year earlier, led by automakers and other manufacturers, the finance ministry said. It was the biggest fall since comparable records began in 2002.
Excluding spending on software, investment declined by 18.1 percent.
"The result confirmed that the Japanese economy is worsening rapidly and going though a very tough phase," a finance ministry official told reporters.
Companies suffered an 11.6 percent drop in sales in the quarter from a year earlier and a 64 percent slump in pretax profits.
Manufacturers were hardest hit, with earnings diving 94 percent.
Before the current downturn, Japan's corporate sector had been a key driver of a recovery in Asia's largest economy following the recessions of the 1990s.
But firms are now cutting back their investment in response to slumping demand and profits, raising fears that the current recession will be deeper and longer than previously feared.
Companies from Sony to Toyota Motor have been slashing jobs to cope with the slump.
Japan's economy shrank 3.3 percent in the fourth quarter of 2008 -- 12.7 percent on an annualised basis -- logging its worst performance since 1974, an initial estimate showed last month.
The business investment figures will be used to calculate revised gross domestic product figures due on March 12.
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