Japan’s economony is back into recession, after it shrank 0.8% overall in the third quarter. The higher-than-expected contraction follows the second quarter’s less-than-expected yearly decline of 1.2 percent.
Advertisement
According to a report released by the Cabinet Office, Japan’s GDP fell to a seasonally adjusted -0.2 percent as compared to a reading of -0.3 percent in the preceding quarter. The euro weakened 0.5 percent at 131.23 against the yen, falling below the support levels at mid-131.
Capital expenditure fell 1.3 percent, more than a median market forecast of a 0.4 percent decrease to mark a second straight quarter of declines, on sluggish investment by automakers and machinery manufacturers.
“We don’t think further stimulus is in the pipeline for now and the GDP print doesn’t change the picture”, Izumi Devalier, Japan Economist at HSBC, told CNBC Asia’s “Squawk Box” on Monday.
“We expect the economy to head toward a moderate recovery thanks to the effect of various steps taken so far”, Japanese Economics Minister Akira Amari reportedly said Monday.
Abenomics policies were meant to jolt the Japanese economy out of stagnation.
The result marks a fresh blow to the prime minister’s eponymous “Abenomics” policy blitz of fiscal spending and aggressive monetary policy easing aimed at reviving the world’s third-largest economy.
“Details are not as bad as the figures might suggest”, Junichi Makino, economist at SMBC Nikko Securities, said in a note, citing declines in inventories and increasing imports. One bright spot: Industrial output advanced 1.1 percent in September from the previous month, yet wasn’t enough to make up for contractions in July and August. “As for the question of whether they will act, it’s hard to say”.
Japanese government officials have said they are considering a fiscal stimulus package, but details wouldn’t be decided until after the third-quarter GDP figure was released.
Advertisement
Analysts have said the data shows that Japan needs reforms to address a shrinking workforce because of the country’s ageing population. In the prior quarter, GDP had registered a revised similar fall.
