Japan economy shrinks more than forecast

TOKYO, Feb. 13 (UPI) -- Japan said Monday its economy, hit by slowing exports, shrank at an annualized rate of 2.3 percent in 2011's fourth quarter, against a forecast of 1.3 percent.

The government blamed the numbers in the October-December quarter on the massive flooding in Thailand that affected production, the strong yen, and the debt crisis in Europe, Kyodo News reported.

The quarterly GDP numbers also were affected by the March 11 earthquake and the tsunami that hit the economy hard and set off a nuclear crisis at Japan's Fukushima-Daiichi nuclear power plant.

The government, however, said the contraction would be temporary and that the economy's upward momentum remains.

Analysts said the country's central bank, the Bank of Japan, would come under more pressure from politicians to further ease monetary policies, Kyodo said.

The Financial Times reported the prospects look brighter moving forward as reconstruction demand grows in the quake-hit region. The British business newspaper said machinery orders in the October-December period increased by 10 per cent from September.