Japan dips into recession again

TOKYO - Agence France-Presse

AFP photo

Japan’s economy slipped into recession for the second time since Prime Minister Shinzo Abe came to power nearly three years ago, data showed on Nov. 16, dealing a fresh blow to his drive to kick start weak growth and end years of deflation.

Abe has staked his reputation on a policy blitz of fiscal spending, aggressive monetary policy easing and structural reforms, dubbed Abenomics, aimed at reviving the world’s third-largest economy.  Japan’s economy, once Asia’s biggest, has been overtaken by rival China, while it struggles with a challenging demographic outlook that is expected to see its population shrink by the tens of millions in coming decades.

Still, it boasts some of the world’s biggest companies, including in the automotive sector, and banks, and its domestic technology plays a key role in powering a wide array of global industries, including vehicles, electronics and high-end machinery.

But the Cabinet Office said Nov. 16 that gross domestic product (GDP) shrank 0.2 percent in the July-September period, or an annualized contraction of 0.8 percent, marking the second straight quarterly decline , which is considered a technical recession.

It was also below the 0.1 percent forecast in a Bloomberg News survey.

The economy contracted in 2014 after consumers tightened their belts following an increase in the country’s consumption tax, which put a dent in a nascent recovery.  That downturn spurred the Bank of Japan to sharply increase its already massive bond-buying program, effectively printing money to spur lending.

In a bright sign, the government slightly improved its April-June data to a 0.2 percent contraction from 0.3 percent shrinkage previously estimated.

The latest figures will turn attention back to the BoJ ahead of a policy meeting this week to see whether it adds to its 80 trillion yen ($653 billion) annual stimulus program.