The Japanese economy has slipped into recession after economists revised the country’s growth figures.
The world’s third-largest economy shrank by 0.9% in the July-September quarter, whilst the April-June quarter was revised from 0.1% growth to show a contraction of 0.03%. This means that the Japanese economy has contracted for two quarters in a row, meaning that the nation is now in a technical recession.
Tomo Kinoshita, chief economist at Nomura Securities in Tokyo, said: “We had already said Japan was in a recession. Today’s number strengthened our case.”
The Japanese economy has been hammered by the strength of the Yen and the damage caused to exports with its major trade partner China, over a diplomatic dispute. Many Japanese factories in China have been forced to close due to ongoing protests from angry Chinese citizens and Japanese goods have been boycotted.
The country’s economy has been hit a triple blow. The slowing of exports to China combined with the aftermath of last year’s earthquake and tsunami and the ongoing global recovery have all impacted heavily. To add to its woes, the debt crisis in the Eurozone and weak recovery in the US have seen many investors flock to haven assets such as the yen, resulting in the Japanese currency strengthening against the US dollar and the Euro, harming exports further.
Last month, Japanese lawmakers approved another stimulus package to revive growth, as the flagging economy becomes a key issue in the upcoming general election. The money, totalling 880bn yen ($10.7bn; £6.7bn), will be used mainly to create employment and support small businesses, the cabinet said.
The central bank is also carrying out an asset purchase programme whereby it buys bonds to keep long-term borrowing costs down.
The Pound to Euro exchange rate is currently trading at 1.2392
The Pound to US Dollar exchange rate is currently trading at 1.6077
The Pound to Australian Dollar exchange rate is currently trading at 1.5324
The Euro to US Dollar exchange rate is currently trading at 1.2968
The Euro to Pound exchange rate is currently trading at 0.8066
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