Japanese Gross Domestic Product shrank more than expected in the third quarter, pulling the economy back into recession for the fourth time in five years and the second recession since Prime Minister Shinzo Abe took office in December 2012.
The first reading for seasonally-adjusted GDP shrank 0.8 per cent, annualized, in the three months ended September 30, from a revised 0.7 per cent drop (previously -1.2 per cent) in the second quarter. This classifies as a recession. Estimates were for a 0.2 percent decline.
The contraction was driven by a 1.3 per cent decline in business spending, whereas economists had forecast only a 0.5 per cent decline.
The growth data today brings attention to the Bank of Japan’s monetary policy and its decision to hold fire on expanding its monetary stimulus programme on October 30. Today’s worse-than-expected result may prompt the central bank to reconsider its options at subsequent meetings.
The yen was not huge impacted by the day on Monday as it was supported by safe haven demand due to uncertainty in the markets after the Paris attacks late on Friday.
The yen traded to Y122.38 per U.S. dollar, having been as much as 0.31 per cent stronger earlier in the morning.
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