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JAPAN has officially slipped into recession. These developed countries must also be pushed out of the top three world economies. Quoted from Reuters, Thursday (02/15), 2024 Japan’s economic growth unexpectedly experienced contraction or minus for two consecutive quarters. This is due to weak domestic demand, thereby increasing uncertainty over the Bank of Japan’s (BoJ) plans to loosen its policy this year.
In addition, several analysts warned of another contraction this quarter due to weak demand in China due to sluggish consumption and production stops at the Toyota Motor Corp (7203.T) unit.
This very weak performance made Japan lose its title as the third largest economy in the world, replaced by Germany. Japan’s gross domestic product (GDP) fell 0.4% on an annual basis in the October-December period after a decline of 3.3% in the previous quarter.
This figure reversed direction compared to the average observer estimate which was an increase of 1.4%. The contraction for two consecutive quarters is also considered a technical recession. Meanwhile, on a quarterly basis, Japan’s GDP fell 0.1%. This figure is far from the average market estimate of an increase of 0.3%.
Meanwhile Credit Agricole Chief Economist Takuji Aida said the weak data may cast doubt on the BoJ’s estimate that rising wages will support consumption and justify a gradual end to massive monetary stimulus.
“There is a risk that the economy will shrink again in the January-March quarter due to slowing global growth, weak domestic demand and the impact of the New Year’s earthquake in western Japan,” Aida concluded. [kumparan.com/photo special]
