Japan’s economy shrank by an annualized 3.6 percent in the third quarter, the government said Friday, the worst decline in seven years.
Japan’s economy contracted from July to September on weak spending and trade, according to revised GDP figures released Friday. The quarterly contraction was larger than a preliminary estimate of a 2.8 percent drop and far larger than the market expectations for a decline of 1.2 percent. In the second quarter, Japan’s economy grew an annualized 2.3 percent.
The weak figures reflect depressed consumer spending and a big drop in imports due to the aftermath of the March earthquake and tsunami. The collapse in the world’s biggest economy also has a spillover effect on Asia, where many Japanese factories provide components for assembling Apple and other consumer electronics. Japan’s exports of cars also are falling as Japanese buyers shift their preference to American, Korean and Chinese models.
Prime Minister Shinzo Abe has focused his economic policies on convincing voters that his growth strategy has borne fruit. Told of the worse-than-expected third-quarter GDP figure, Abe’s spokesman, Yoshihide Suga, said Japan needed to take preventive measures to protect its exports and make efforts to lift consumption.
Barely two months ago, the International Monetary Fund raised its global growth forecast for 2017, to 3.1 percent from 2.7 percent, pointing to policies aimed at boosting spending. Just over a year ago, the IMF predicted that the global economy would shrink by 0.1 percent in 2017 and by 0.4 percent in 2018.
In March, the Cabinet Office released revised GDP figures. The reports showed that the world’s third-largest economy expanded 0.9 percent in the final quarter of 2016, and expanded 2.5 percent in 2016 as a whole.
Japan’s economic growth has been essentially stagnant for nearly half a decade — since the Great Recession in 2008. The ruling Liberal Democratic Party lost power in a July election, amid voter frustration over wages and falling prices. Since Abe’s return to power, the economy has been recovering. But most analysts say Japan still faces its long-term challenge of raising productivity and wages to boost incomes and encourage consumers to spend.
The Japan’s gross domestic product is the total value of goods and services produced within the country. The figures are the result of a major series of revisions from the Cabinet Office that measures changes over time.
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