Japan’s unexpected recession raises concerns about economic plans

Author
Foodcom Experts
16.02.2024
Japan’s unexpected recession raises concerns about economic plans
Summary
Table of contents
  • Japan falls into recession and records two consecutive quarters of GDP decline.
  • Germany overtakes Japan as the world’s third-largest economy.
  • Doubts emerge about the Bank of Japan’s plan to end its ultra-loose monetary policy.

Japan slips into recession

Japan unexpectedly slipped into recession at the end of last year, losing its position as the world’s third largest economy to Germany. The country’s GDP fell by an annualized 0.4% in the October-December period, following a decline of 3.3% in the previous quarter. This unexpected downturn has raised doubts about the Bank of Japan’s plans to exit its ultra-loose monetary policy.

Future economic challenges

Weak domestic demand, sluggish consumption and production halts at a Toyota Motor Corp. plant are among the major factors contributing to the downturn. With consumption and capital spending shrinking for three consecutive quarters, there are concerns about Japan’s road to recovery. Despite the expectation that the massive monetary stimulus will be phased out, the recent weak data could delay the Bank of Japan’s policy adjustment.

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