The Japanese economy contracted an annualized 0.8 percent in the third quarter after a 0.7 percent decline in the previous quarter. The country has fallen into its second recession since Shinzo Abe became Prime Minister in 2012.
On a quarterly basis, growth contracted 0.2% in the third quarter from the second quarter, weaker than forecasts of a 0.1% decline.
Japan suffered from weak business investment and a decline in inventories on weak global growth – with companies cutting production and spending.
Private demand fell 0.5 percent after falling 0.2 percent in the previous quarter. Private non-residential investment dropped 1.3 percent, while residential investment climbed up 1.9 percent and household consumption increased 0.5 percent.
Atsushi Takeda, an economist at Itochu Corp. in Tokyo, was quoted by Bloomberg as saying:
“This report shows the increasing risk that Japan’s economy will continue its lackluster performance. The weakness in capital spending is becoming a bigger concern. Even though their plans are solid, companies aren’t confident about the resilience of economy at home and abroad.”
The data will increase pressure on the government and central bank of Japan to boost fiscal and economic stimulus.
The government is optimistic that an economic recovery is underway, despite declining growth.
Economics minister Akira Amari said in a statement: ”While there are risks such as overseas developments, we expect the economy to head toward a moderate recovery thanks to the effect of various (stimulus) steps taken so far,”
