In the Fourth Quarter of 2015 Japan’s Economy Contracted Once More

In the Fourth Quarter of 2015 Japan’s Economy Contracted Once More

On Monday, according to a government data, the economy of Japan shrank in the last quarter of 2015. The contraction was more severe as compared to expectations, in the middle of rising signs of slowing global economy. The nation is not being able to break free from its expansion and contraction cycle in spite of the Abenomics program being there for more than three years.

Japan's gross domestic product contracted at an annualized rate of 1.4 percent in Q4 that ended on December 31after a revised 1.3 percent growth in the previous according to the Cabinet Office. The economists had expected an average drop of 0.8 percent.

One of the largest contributors of the weakness was the private consumption disheartening the policy path adopted by Prime Minister Shinzo Abe to boost inflation and push the third largest economy in the world towards a path of growth.

In the month of January, the yen gained six percent against the dollar, disheartening the exporters although the government introduced monetary stimulus and the officials attempted to suppress its unstable climb.

In Tokyo, Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. said, "Consumption was weak, even after taking out seasonal factors, as households tightened their purse strings. The downside risks to Japan's economy are likely to increase as the yen's gains may damp capital spending and exports, and private consumption also is looking weak. There's no clear driver to support Japan's economy."