Data Shows in April-June Quarter Japan’s Economy Shrinks which Could Mean Additional Stimulus

Data Shows in April-June Quarter Japan’s Economy Shrinks which Could Mean Additi

In the April- June quarter, the economy of Japan shrank at a yearly pace of 1.6 percent. The drop is attributed to fall in exports and lessened consumers spending. This is adding to the pressure faced by Prime Minister Shinzo Abe for boosting the financial policies in order to improve the economy which is facing deflation for decades.

Analysts say that the slowdown in China's economy along with its effects on the overall Asian markets has also made the chances of a rebound during the July-September quarter meek.

The dismal data signals at heightened pressure on Japan's economy which is at a standstill and increases stress on policymakers who are expected to offer some added monetary stimulus later in the year.

Private consumption, dropped at an average yearly rate of 3.0 percent as compared to the previous quarter. The slow rate of growth in wages, low temperature along with poor weather has lowered spending on summer clothes and air conditioners.

Chief Japan economist at Credit Suisse, Hiromichi Shirakawa, said "If weak private consumption persists, that would be a further blow to Abe's administration, which is facing falling support rates ahead of next year's Upper House election." He added, "This could raise chances of additional fiscal stimulus."

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