"It's likely that Japan's economy hit bottom in the last quarter"
- Shuichi Obata, senior economist at Nomura Securities
The world's third biggest economy sank into recession, posting two consecutive quarters of contractions, meeting analysts' expectations. Japanese gross domestic product shrank by 0.9% in the July-September period, after a 0.03% contraction in the previous quarter. On a yearly basis, the economy contracted by 3.5% in the three months through September. The weak economic performance is adding to signs that more stimulus measures are expected to be announced soon, and highlighting the risk that weak growth will derail a planned sales-tax increase. A very strong yen, which weakened exports and a diplomatic row with major trade partner China, was one of reason why Japan is in technical recession, having contracted for two quarters in a row.
"It's likely that Japan's economy hit bottom in the last quarter," said Shuichi Obata, senior economist at Nomura Securities in Tokyo. "The new government will aim to have solid growth by the middle of next year as they have to decide whether to raise the sales tax or not."
"There have been some positive indicators out in October but there is still a good chance that Japan's economy will suffer another contraction in the October-December quarter," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.
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