Japan falls back into recession

The numbers from the Cabinet Office on Monday showed that gross domestic product, the value of a nation’s goods and services, declined at an annualized pace of 0.8 per cent in the third quarter, and contracted a seasonally adjusted 0.2 per cent from the previous quarter. “Weak capital spending was a concern, but excluding these factors, the GDP figures were not so bad”, said Takeshi Minami, chief economist at Norinchukin Research Institute.

Growth in the country was expected to decline after it fell a revised 0.7% in the second quarter on weak demand domestically.

Private consumption, which accounts for about 60 per cent of the economy, rose 0.5 per cent from the previous quarter, roughly in line with a median market forecast for a 0.4 per cent increase, the data showed.

Business investment subtracted 0.2 percentage point from growth. Private non-residential investment dropped 1.3 percent, while residential investment climbed up 1.9 percent and household consumption increased 0.5 percent.

Abe has made bolstering the economy a priority and advocated for reflationary policies that weakened the yen and boosted corporate profits. Kuroda had said in September it wouldn’t be unusual for the economy to grow in the July- September quarter.

Last month the BOJ cut its economic growth and inflation projections but held off on expanding stimulus, hoping that the economy recovers well enough to accelerate inflation to reach the its ambitious 2% target.

Stocks in Tokyo fell around 1% in early Monday morning trading. “As for the question of whether they will act, it’s hard to say”.

So far this year, experts have been betting that the government will need to step up its stimulus efforts, but central bank officials have resisted doing so in recent months. Amari also said GDP was likely expand in the current quarter.