Technically yes, and European markets and oil prices responded ‘as if.’ But the growth rate could change quickly when next month’s figures come in.
Prime Minister Shinzo Abe may delay an unpopular sales tax hike and call a snap election two years before he has to go to the polls.
The recession comes nearly two years after Abe returned to power promising to revive the economy with his “Abenomics” mix of massive monetary stimulus, spending and reforms, and is unwelcome news for an already shaky global economy.
Gross domestic product (GDP) shrank by an annualised 1.6 percent in July-September, after plunging 7.3 percent in the second quarter following a rise in the national sales tax, which clobbered consumer spending.
An adviser to Abe termed the economic slide “shocking,” and urged the government to take steps to support the economy.
Economy Minister Akira Amari said some economic stimulus was likely, but added it would be hard to craft an exceptionally big package because of the need for fiscal disciplin
The yen slipped on the poor GDP reading, with the dollar briefly pushing to a seven-year high above 117 yen. The Nikkei stock average fell 3 percent.
Sluggish growth and easing price pressures due to sliding global oil prices prompted the Bank of Japan to unexpectedly expand its massive monetary stimulus last month.
