Date
18 January 2017
Abenomics is failing to deliver on Shinzo Abe's promise to grow Japan's economy. Photo: AFP
Abenomics is failing to deliver on Shinzo Abe's promise to grow Japan's economy. Photo: AFP

Japan enters second recession under Abe

Japan’s economy contracted more than expected in the third quarter on sluggish business investment, falling into its second recession since Prime Minister Shinzo Abe took office in December 2012.

Gross domestic product declined an annualized 0.8 percent in the three months to Sept. 30, following a revised 0.7 drop in the second quarter, the Cabinet Office said Monday in Tokyo.

Economists had estimated a 0.2 percent decline for the third quarter, Bloomberg reported.

Weakness in business investment and shrinking inventories contributed to the contraction amid concerns over slower growth in China and the global economy that prompted Japanese firms to hold back on spending and production.

While growth is expected to pick up in the current quarter, the GDP report could put pressure on Abe and Bank of Japan governor Haruhiko Kuroda to boost fiscal and monetary stimulus.

The BOJ holds a policy meeting later this week.

“Japan’s economy is in a soft patch, and even though it may rebound in the coming months, the momentum will probably be very weak,” Atsushi Takeda, an economist at Itochu Corp. in Tokyo, said before the report.

“The government will probably have no choice but to take action to stimulate the economy, and pressure for additional monetary easing will likely build up again.”

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