TOKYO: The fourth quarter of 2007 saw Japan's corporate titans battening down their capital expenditure hatches in preparation for the expected economic storm, reports the nation's Ministry of Finance – fueling fears that the world's second largest economy is tilting into recession.
Or as Simon & Garfunkel more tunefully put it: "The nearer your destination, the more you slip-sliding away."
In last year's final quarter, Nippon's corporate capital expenditure fell year-on-year by 7.7%, the most in sixty months and almost quadrupling analysts' predictions.
According to Mizuho Securities' senior economist Naoki Iizuka: "Rising raw material prices hurt manufacturers' earnings, while slack domestic demand, slow sales and the negative impact of tighter construction rules hit non-manufacturers.
"We still need to crunch numbers to be sure, but Japan's October-December GDP may be revised down to negative growth given the weak capital spending figures."
In London there were similar reactions. "The only thing that has kept Japan going was a cheap yen and the world boom. Now they are gone," opines Charles Dumas, head of the world service at Lombard Street Research.
"The yen is taking off, or rather yen carry [support by investors] is being taken off. Probably Japan is in recession in the first half of this year."
Economists also point to fears of a US recession, diminishing industrial output, pessimistic consumer sentiment, and trembling financial markets as factors to worsen Japan's economic outlook.
Data sourced from International Herald-Tribune; additional content by WARC staff