News / Business

Japan economy shrinks 0.4 percent in last quarter of 2015

Monday, 15 February 2016 4:27 PM [ Last Update: Saturday, 20 February 2016 12:51 PM ]

File photo shows Governor of the Bank of Japan (BoJ) Haruhiko Kuroda answers a question during his regular press conference in Tokyo. ©AFP

New official data show Japan's economy has further contracted during the last quarter of 2015, dealing another blow to Prime Minister Shinzo Abe's bid to boost the country’s economic growth.

According to the latest official report, the world’s third biggest economy saw a contraction of 0.4 percent during the period between October and December 2015, which is translated into an annual 1.4 percent drop, AFP reported.

The fall marked Japan's second quarterly contraction in 2015, with the country’s gross domestic product (GDP) edging up a tepid 0.4 percent for the whole year.

The low figures have been construed by experts as another blow to Abe's bid to boost the country’s economic growth, known as Abenomics, which has been also shaken by an equity market rout since the start of the year and a resurgent yen, which threatened to dent Japanese companies' profits.

The government has so far dismissed the weak numbers by saying that "the fundamentals (of the economy) remain good," though analysts believed that Abe's growth plan is stumbling.

"The latest data show that it is difficult to say that the Abe government has achieved of its goal of a 'virtuous cycle' of rising incomes, wages, and investment," said Tobias Harris, political risk analyst at US-based consultancy Teneo .

He added, "Japan has remained too dependent on export-led growth, which has suffered in light of China's slowdown and the effects it has had on the global economy."

Latest reports indicate that Japan's factory output has suffered as worries persist about global growth, with revised data on Monday showing that industrial production has contracted 1.7 percent in December, worse than a preliminary 1.4 percent drop.

To add to Abe’s woes, Japan's national currency, the yen, which surged four percent last week against the dollar, turned lower on Monday due to rumors about the Bank of Japan unveiling fresh monetary easing measures as well as speculation about Tokyo intervening in currency markets to stem the unit's rise.

Last month, the Bank of Japan shocked investors by announcing the negative rate policy, a plan that aims to force banks into lending by charging them for storing excess reserves.

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