Japan's economy contracts, and the risk of recession grows
The GDP of the world's third-largest economy contracted 2.1% in the third quarter – a much larger decline than the median market forecast
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TOKYO (Reuters) - Japan's economy contracted in the July-September quarter, halting two consecutive quarters of expansion, due to weak consumption and exports, complicating the central bank's efforts to phase out its massive monetary stimulus amid rising inflation .
The data suggests that stubbornly high inflation is hurting household spending and adding to the pain of manufacturers due to slowing global demand, including in China.
“Given the absence of a growth engine, I would not be surprised if the Japanese economy contracted again in the current quarter. The risk of Japan entering a recession cannot be ruled out,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Weak growth and the specter of slowing inflation could delay the BOJ’s exit from negative interest rates,” he said.
The gross domestic product (GDP) of the world's third-largest economy contracted 2.1% in the third quarter, according to government data released on Wednesday, a much larger decline than the median market forecast, which predicted an annualized decline. of 0.6%. This followed a 4.5% expansion in the previous quarter.
