Japan Contracts Third Straight Quarter; No Escape
Economists predicted an end to the recession in Japan.
However, economists were wrong again as Japan fourth-quarter GDP shows economy still in recession
Japan’s economy contracted for the third consecutive quarter in October-December, showing the country is struggling to escape from a mild recession and adding weight to the new government’s push for radical policy steps to revive growth.
Gross domestic product (GDP) fell 0.1 percent in October-December from the previous quarter, compared with the median forecast of 0.1 percent expansion, according to a Reuters poll.
Economics Minister Akira Amari said while the economy was still showing some weakness, it was likely to resume moderate recovery helped by monetary easing, stimulus spending and an expected pick-up in global growth.
On an annualized basis, the economy contracted 0.4 percent, Cabinet Office data showed on Thursday. Economists had expected a 0.5 percent annualized increase.
Private consumption rose 0.4 percent from the previous quarter versus the median forecast for a 0.5 percent increase.
Capital expenditure fell 2.6 percent, more than the median estimate for a 1.8 percent decline, marking the fourth straight quarter of decline.
A $117 billion stimulus package is likely to pass parliament in coming weeks.
Those are not good numbers. Moreover, given Japan’s massive debt-to-GDP ratio, there is virtually no escape for the predicament Japan is in.
If you are looking for who and what to blame, the answer is simple: Keynesian and Monetarist stimulus foolishness.
Mike “Mish” Shedlock