Japan’s economy shrank 0.4 percent between October and December, compared with the previous quarter. This raises questions about Prime Minister Shinzo Abe\u2019s financial stimulus policy to lift the world\u2019s third largest economy out of stagnation.<\/p>\n
On an annualized basis the economy contracted 1.4 percent during the period.\u00a0Economists had predicted a 1.2 percent fall, but actual numbers are worse because of a sharp decline in consumption.<\/p>\n
Private consumption, which makes up 60 percent of Japan\u2019s GDP, dropped 0.8 percent, which is more than the predicted 0.6 percent decline, a sign the government\u2019s stimulus policies have so far failed to make the Japanese spend more.<\/p>\n
\u201cThe downside risks to Japan\u2019s economy are likely to increase as the yen\u2019s gains may damp capital spending and exports, and private consumption also is looking weak.\u00a0There\u2019s no clear driver to support Japan\u2019s economy,\u201d Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance in Tokyo told\u00a0Bloomberg.<\/p>\n
Wages in Japan haven\u2019t grown more than one percent in any year since 1997, and actually shrank in the last four years when adjusted for inflation.<\/p>\n
With the yen climbing up to 113.8 to the dollar in recent weeks, investors expect even further stimulus from the central bank, with the Nikkei 225 index closing 7.16 percent higher on Monday.<\/p>\n
Yoshihide Suga, Japan\u2019s chief cabinet secretary has said the drop in consumer demand is linked to an exceptionally mild winter. \u201cThe economic fundamentals are good. We expect a steady recovery in business conditions,\u201d he said.<\/p>\n
Prime Minister Shinzo Abe’s plan to boost the economy – dubbed \u2018Abenomics\u2019 – was introduced after he won the December 2013 election. He is aiming to tackle deflation that Tokyo has been trying to address for almost 20 years. Abe also wanted to boost demand and investment as well as weaken the yen to help local producers become more competitive.<\/p>\n","protected":false},"excerpt":{"rendered":"
Japan’s economy shrank 0.4 percent between October and December, compared with the previous quarter. This […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-439","post","type-post","status-publish","format-standard","hentry","category-news"],"yoast_head":"\n