Japan's economy unexpectedly slipped into recession in the July-September quarter, government data showed Monday - a development that is likely to result in Shinzo Abe, prime minister, delaying the second planned hike in sales taxes.
Gross domestic product (GDP) contracted an annualized real 1.6% in the third quarter, following a revised 7.3% plunge in April-June, the Cabinet Office said in a preliminary report.
The weak data will make opposition parties “raise their voice, saying ‘Abenomics was a failure,’ ” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co according to The Wall Street Journal. “People in the market may harbor doubts about policy continuity and confidence in the government.”
Following the release of the GDP report, the yen/US dollar rate fell to 117 - its highest in seven years before rising to 115.7.
Earlier this month the Bank of Japan raised the planned amount of quantitative easing/ bond buying to boost markets
Private consumption grew an annualized 1.5% in Q3 after a drop of 18.6% in the second quarter while exports were weak in the quarter growing 1.3% quarter-on-quarter and imports also rose.
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