TOKYO, JAPAN
Japan’s economy contracted an annualised 1.4 percent in the final quarter of last year as consumer spending slumped, adding to headaches for policymakers already wary of damage the financial market rout could inflict on a fragile recovery, Gross Domestic Product (GDP) data showed on Monday (February 15).
The data underscores the challenges premier Shinzo Abe faces in dragging the economy out of stagnation, as exports to emerging markets fail to gain enough momentum to make up for soft domestic demand.
The GDP contraction in the October-December period was bigger than a market forecast for a 1.2 percent decline, matching a fall marked in the second quarter of last year, Cabinet Office data showed. It followed a revised 1.3 percent increase in the previous quarter.
Government spokesman Chief cabinet secretary Yoshihide Suga commented on the fall and instead said that overall things remained positive.
“Financial profit is good and income conditions are also currently recovering. Both are economic fundamentals and I don’t believe there is a future change in the economic improvement,” Suga said.
Last month the Bank of Japan (BOJ) unexpectedly cut a benchmark interest rate below zero, stunning investors with another bold move to stimulate the economy as volatile markets threatened its efforts to overcome deflation.
But the shock move has failed to boost Tokyo stock prices or weaken the yen as Japanese markets remained at the mercy of a global equity sell-off, bolstering a view among investors that the BOJ is running out of policy options.