Courtesy of Mish.
With two consecutive quarters of contracting Gross Domestic Product, Japan is officially back in recession. GDP shrank 1.6% annualized.
Unadjusted for price changes, the Japanese economy contracted an annualized 3 percent, the Cabinet Office said.
None of this was “expected”. We will explore “why” in a moment. First consider some headlines.
Bloomberg: Japan Unexpectedly Enters Recession as Abe Weighs Tax.
Wall Street Journal: Japan Falls Into Recession. GDP Declines 1.6%, Setting Stage for Delay in [Another] Sales-Tax Increase.
Time: Japan Sinks Into Recession (Again).
Time Reports …
An unexpected contraction in quarterly GDP shows that Prime Minister Shinzo Abe’s radical economic program is badly broken. GDP in the quarter ended September shrank by an annualized 1.6% — far, far worse than the consensus forecasts. That followed a disastrous 7.3% contraction in the previous quarter. Speculation in Japan is that the bad results will push Abe to call a snap election only two years after taking office.
Financial Times: Sales Tax Tips Japan Back Into Recession
Financial Times Reports …
Japan is poised for a snap election after its economy tipped into a technical recession, increasing the odds that prime minister Shinzo Abe will delay plans to raise the country’s sales tax next year and appeal for a fresh mandate.
Monday’s preliminary data for the period between July and September was far worse than markets expected, showing the economy shrank 1.6 per cent quarter-on-quarter on an annualised basis. Analysts had expected growth of 2.2 per cent. …
