Pedestians are reflected on a share prices board in Tokyo on November 9, 2012. AFP FILE PHOTO
TOKYO – Japan’s economy contracted 0.9 percent in July-September from the previous three months, official data showed Monday, the first dip into negative territory in three quarters.
The data underscore fears about a stuttering post-disaster recovery for the world’s third-largest economy which has suffered from the global slowdown and a Tokyo-Beijing diplomatic spat that dragged on exports.
The figures from the Cabinet Office on Monday, largely in line with market expectations, come after Japan’s economy remained in positive territory for the past two quarters, after shrinking 0.3 percent in the last three months of 2011.
Japan’s economy, hammered by last year’s quake-tsunami disaster, is also suffering from weakness in Europe, a key export market and the strong yen, which hit record highs around 75 against the dollar late last year and remains strong.
A high yen makes exporters’ products less competitive overseas while shrinking the value of their repatriated foreign income.
The government has taken a series of steps to spur growth, including offering incentives for fuel-efficient vehicle purchases and measures to rebuild the northern region hit by the tsunami.
However, those auto subsidies have now expired. Also, demand for Japanese cars has plunged in China, the world’s biggest vehicle market, amid a consumer boycott that followed Tokyo’s nationalisation in mid-September of an East China Sea island chain claimed by both Japan and its huge neighbour.
Last month, The Bank of Japan unveiled $138 billion in fresh monetary easing after central banks in the United States and debt-hit Europe also announced policy easing measures to stoke growth.