Japan’s economy shrank 0.9 per cent between July and September, the steepest decline since the earthquake hit in the first quarter of 2011, as exporters suffered a 5 per cent fall in shipments to key markets such as China and Europe.
Growth in the world’s third largest economy had been relatively strong in the first half of the year, as output was boosted by the redevelopment of parts of the northeast affected by the tsunami and by a revival of consumer spending, assisted by state subsidies to buy fuel-efficient cars.
Yet in the third quarter, as manufacturers cut production amid a steady worsening in their profit outlook, the economy slipped once more, according to Monday’s initial estimate from the Cabinet Office. Increases in public spending and a small rise in private residential investment were not enough to offset the export slump, which contributed to a 0.5 per cent fall in private consumption.
On an annualised basis, gross domestic product fell 3.5 per cent in the quarter, slightly more than consensus estimates, following a revised 0.3 per cent gain in the previous quarter.
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