Initial data suggests that the world’s third-largest economy has contracted for a second consecutive quarter, marking a technical recession.
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That followed a revised 0.7% contraction in the previous quarter, fulfilling the technical definition of a recession which is two back-to-back quarterly contractions.
On a quarter-on-quarter basis, the economy shrank 0.2 percent in the third quarter, the Cabinet Office data showed.
The disappointing results may put pressure on the government and central bank to implement further monetary and fiscal stimulus measures, although economists are predicting GDP to grow in the current quarter, which runs through the end of this year.
“This report shows the increasing risk that Japan’s economy will continue its lackluster performance”.
Akira Amari, the government minister in charge of revitalising the economy, put a largely positive s …
In what is an encouraging outcome, private consumption, making up around 60% of the Japanese economy, rebounded by 0.5% having fallen heavily in the three months to June. “Companies are still wondering whether the economy is resilient enough to increase investment, so domestic demand wasn’t strong enough to offset the weakness from overseas”.
The benchmark Nikkei-225 stock index fell 1.04 percent by the end of trade, with the Paris terror attacks adding to investor unease in Asia.
Evidence of another recession since he took office – the earlier one was in 2014, after the sales tax was increased – is not good news for Abe, who has made bolstering the economy a priority and advocated for reflationary policies that weakened the yen and boosted corporate profits.
Still, analysts broadly expect the economy to pick up in coming quarters, with the BoJ seen further loosening monetary policy and Abe tipped to unveil fresh stimulus. Prime Minister Shinzo Abe aims to expand nominal GDP by 20 percent by 2020.
Japan’s GDP shrank 0.2% in the July-September period, or an annualised contraction of 0.8%, mark …
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Amari urged Japanese firms to use their record cash holdings to raise wages and boost capital spending to generate a virtuous circle of growth led by the private sector, instead of simply demanding yet more stimulus when such growth remained elusive.
