For the first time in three quarters, the Japanese economy shrank by 3.5% during the July to September period of this year, putting a big hamper on the hopes for continuing economic rebound, and even signaling to analysts that recession has begun. The annual growth rate for the quarter was announced on Monday, following the dreary expectations that the world’s third-largest economy has been hit hard from the ongoing territorial dispute with China, as well as exports continuing to suffer from the strong yen.
Japan’s government data has revealed a drop in consumer spending by 0.5% for the period, and corporate capital spending fell by 3.2%. Economists are now expecting another decline in the current October-December quarter, although not as severe as July-September. But two quarterly contractions in a row would be a clear indication of recession. David Rea, with London’s Capital Economics, says that if the current quarter does recover, it will only be by a fractional amount.
As the one year mark passed for the March 2011 earthquake and tsunami disasters, spending on reconstructions efforts has dramatically declined. Combined with weak consumer spending at the time as well, the April-June quarter only presented a 0.7% growth, half of the 1.4% that was first reported. Before the tensions with China began, the Japanese government was predicting a turnaround late in the year, with an annual growth of 2%, however such a turnout before 2013 now seems unlikely.
[via The Republic]
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