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Japan’s economy unexpectedly contracted again in the October-December period, provisional government data showed Thursday, as high inflation crimped domestic demand and private consumption in what’s now the world’s fourth-largest economy.
A second-straight quarter-on-quarter GDP decline also means Japan has dipped into a technical recession, complicating the case for interest rate normalization for Bank of Japan Governor Kazuo Ueda and fiscal policy support for Japanese Prime Minister Fumio Kishida.
Provisional gross domestic product contracted 0.4% in the fourth quarter compared with a year ago, after contracting 2.9% in the July-September period. This was way below the median estimate for 1.4% growth in a Reuters poll among economists. The GDP deflator in the fourth quarter stood at 3.8% on an annualized basis.
The Japanese economy also contracted 0.1% in the fourth quarter from the previous quarter, after shrinking 0.4% in the third quarter from the second. This was also weaker than expectations for 0.3% expansion.
Private consumption declined 0.2% in the fourth quarter from the previous quarter, in contrast to the median estimate for a 0.1% expansion.
This is a developing story. Please check back for more updates.