Japan’s economy sinks into contraction

The Japanese economy shrank by 2.1% year over year in July–September, the government reported.

Weak wage growth in the world’s third-largest economy has also eroded its vigor; the GDP shrank by 0.5% in a quarter, according to the Cabinet Office.

The results were shockingly low, as private consumption fell by 0.2% year on year and corporate investment fell by 2.5%, with investment and demand falling in other big economies.

According to the most recent estimates, the economy grew at a revised annual rate of 4.5% in April–June and 3.7% in January–March. The previous estimate for the April-June quarter was a 6% annual expansion.

According to the financial services firm ING, the latest quarter’s performance was significantly worse than projected, with an annual decrease of 0.5% forecast.

Japan’s Prime Minister Fumio Kishida recently unveiled a stimulus plan worth more than 17 trillion yen ($113 billion), which includes tax exemptions and assistance for low-income people who have suffered as prices for many needs have risen owing to global inflation and the weak yen.