THE release, on September 7th, of quarterly GDP figures for Japan and an unexpectedly high unemployment rate in America cast yet more shadows over the already sombre prospects for the world economy. Stockmarkets around the world are in retreat.

Japan’s economy shrank by 0.8 % in the second quarter of this year, and 3.2% on an annualised basis. Japanese GDP statistics are erratic and unreliable. But most economists believe that the economy did contract painfully between April and June and that it will probably do so again in the third quarter, thereby meeting the most commonly used technical definition of a recession. Indeed, so bleak are most forecasts that the latest GDP figures were in fact better than most private economists expected.

This is depressing news for the other 20 members of the Asia-Pacific Economic Co-operation forum (APEC), whose finance ministers have just met in China. With the big exception of China itself, most face stagnant or falling demand at home and are suffering from the simultaneous sharp downturns in the three big rich-country economic blocks: Japan, Europe and America. In previous "global recessions" in recent decades, demand has remained buoyant in at least part of the world. In 1991, for example, the American economy sank, but Japan, Germany and East Asian emerging economies continued to boom. Since then, the worldwide impact of prolonged stagnation in Japan has been mitigated by the strength of the American and to a lesser extent European economies.

For East Asia in particular, Japan’s troubles are menacing, especially since there is no immediate prospect of their coming to an end. Even government ministers in Japan are admitting it will be hard to avoid a fall in GDP for the year as a whole. And Junichiro Koizumi, the prime minister, has promised to forswear the mechanism by which his predecessors have averted even more painful contractions: massive government spending, much of it on unnecessary infrastructure projects. Within an hour of the publication of the GDP figures, the cabinet did approve the preparation of a "supplementary budget". But Masajuro Shiokawa, the finance minister, insisted that it would not be the traditional boost to public-works spending. Mr Koizumi came to office on the back of promises—which he as yet shows no sign of delivering—to tackle the underlying structural reforms to industry and finance that most economists agree are essential to long-term growth. But without sustained government spending in the short term, Japan’s deflationary slump may be exacerbated.

The fear that slowdowns in different parts of the world may be mutually reinforcing is a worry even in America, itself a member of APEC. On the eve of his departure for China, Paul O’Neill, America’s treasury secretary, reverted to a common theme of recent months: that, despite its current troubles, the American economy is sound and will recover soon, but "it isn’t enough for the US economy to be the only engine of economic growth in the world." In Suzhou, he did his best to talk up prospects for the American economy, which he said he expected to show signs of recovery later this year. Indeed, he was speaking soon after some relatively encouraging data had been published by the National Association of Purchasing Management (NAPM). Its index of manufacturing activity for August, based on surveys of 400 industrial firms, was still below 50%, indicating that manufacturing industry was still shrinking. But this was the highest reading since November last year, and the steepest month-to-month rise for more than five years. This led optimists to declare that the recession in manufacturing might have found a bottom, as consumer-spending remains resilient and firms’ inventory levels sink.

But recent survey data suggest that the American consumer, whose heroic determination to keep on spending has been a prime reason behind the economy’s ability to avoid a recession, may at last be losing confidence. A stream of bad news from companies reporting on projected job cuts will not help. The figures published on September 7th showed that the unemployment rate jumped to 4.9% last month, much higher than expected. And falling demand elsewhere in the world could also act as a brake on any incipient recovery. In June, the value of its exports of goods and services fell by 2.0% compared with May; the fall for goods alone was even sharper, at 3.2%.

Hitherto, America has succeeded, in effect, in exporting some of its recession. Places such as Taiwan and Singapore, which manufactured the electronic components sucked in by the information-technology bubble, have been especially hard-hit. (Singapore’s non-oil exports fell in July by a staggering 24% compared with the same month last year.) But even Europe, which at first thought it might weather the American downturn because of the strength of internal demand within the euro area, is now struggling.

Just this week, leaked reports from the International Monetary Fund showed that its economists have revised their forecasts for Europe’s largest economy downwards for the second time in a month. They now expect Germany to record growth of only 0.9% this year. In consequence the IMF has also cut its forecast for annual GDP growth in the euro area as a whole, to 1.9%. This will strengthen the arguments of those urging the European Central Bank (ECB) to do more to stimulate growth by further reducing interest rates. In contrast to America’s central bank, the Federal Reserve—which has reduced interest rates seven times this year—the ECB has acted only twice.

Doubtless Mr O’Neill had the ECB in mind when he gave his warning about America’s inability to carry the world economy entirely on its own shoulders. And at least in the case of Europe, the outside world has a clear prescription: a more proactive and aggressive use of monetary policy to stoke demand. More problematic will be trying to shed some light into the immediate gloom hanging over the meeting in Suzhou–the looming recession in Japan. Having, for a decade, urged its policymakers to take on the sort of root-and-branch structural reform Mr Koizumi has promised, foreign economists and finance ministers may now be worrying about what will happen in the unlikely event their advice is taken at last.