Japanese economy contracts by 0.4%

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Image caption Ja n’s population is sow old and shrinking, which is worrying for the country’s long-term economic outlook

Ja n’s restraint contracted in the final three months of 2015, adding to a string of setbacks for the control’s economic reform policy.

Between October and December, it shrank by 0.4% associated with the previous quarter, official figures show.

Expectations for the multitudes were for a quarterly contraction of 0.3%.

Weaker domestic demand, together with slower investment in houses, contributed to the disappointing numbers.

On an annualised basis the economy contracted 1.4% during the time. That com res with expectations for an annualised contraction of 1.2%.

The annualised individual is the rate at which the economy would have contracted over a rounded out 12 months had the December quarter been a reflection of the entire year.

Guarding exports grow

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Image caption Hidden consumption makes up some 60% of Ja n’s economic activity

Prime Serve Shinzo Abe’s plan to revive the economy – dubbed Abenomics – was introduced after his December 2013 choice win.

Its aim was to combat deflation, which Ja n has struggled with for nearly two decades, as fairly as boost demand and investment. It also wanted to weaken the yen, so helping big exporters identical to Toyota become more competitive.

But growth has remained a concern. Analysts say Ja n needs to confirm exports grow in order to support future economic growth – for every 1% that Ja n’s control grows, between 0.5 and 0.7% comes from exports.

The sticks also relies heavily on domestic consumption but its population is ageing and shrivel up so fewer people are contributing to the economy.

Analysis: Rupert Wingfield-Hayes, BBC Message, Tokyo

There has been a lot of hyperbole surrounding the Abenomics project.

The Bank of Ja n’s limitless money printing project has been described as a “money-spewing bazooka”.

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Image caption Prime Minister Shinzo Abe’s mercantile policy has been dubbed Abenomics. The policy was introduced after his December 2013 poll win.

Mr Abe’s economic policy – Abenomics – is based on three arrows:

  • The monetary arrow: augmentation of the money supply to combat deflation
  • The fiscal arrow: increased oversight spending to stimulate demand in the economy
  • The structural arrow: structural recovers to make the economy more productive and competitive

Haruhiko Kuroda, governor of the state’s central bank, has repeatedly said he will do “whatever it takes” to Waterloo 20 years of deflation.

But the core of Abenomics is not reflation; it is weakening the Ja nese currency, the yen.

Why? Because Mr Abe and his advisors remember that the only easy way to get Ja n growing again is to increase exports – the most critical engine of growth for Ja n, say analysts.

Read Rupert in full

Not all bad?

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Image caption Until December, Ja n’s exports were spread, thanks to a lower yen

In the three months to September, according to revised calculates, Ja n avoided a technical recession. But it has already been in recession four controls since the global financial crisis.

Some analysts said Monday’s includes should be viewed in context.

“A single negative growth number should not be over-interpreted because the curtness remains in rather good shape and continues to get strong policy brace,” said economist Martin Schulz.

Stock market annoyances

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Investors seemed to shrug off Monday’s development numbers, with the benchmark Nikkei 225 jumping more than 4% tartly after the figures were released.

However, the benchmark shed myriad than 11% last week, which was a short trading week due to a buyers holiday on Thursday.

The country’s big exporters were rticularly hard hit as a sounder yen against the dollar hurt investor sentiment.

“Until December, exports be struck by still been growing, thanks to a lower yen,” said Mr Schulz. “But both turns have already been reversed during December, and the yen is rallying now,” he combined.

Other growth efforts

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Epitome caption The BOJ’s Haruhiko Kuroda has dismissed suggestions recent stock market deceived bies were linked to the introduction of negative interest rates

In a surprise rouse last month, the Bank of Ja n (BOJ) introduced a negative interest under any circumstances of -0.1%.

The rate cut into negative territory – the first ever for Ja n – is designed to development spending and investment, which should in turn boost economic broadening.

Some analysts however have cast doubt over how effectual the rate cut will be. Mr Schulz said weaker investment, including dwelling investment, would probably carry on well into 2016.

“While modulate interest rates certainly help investment, construction now faces controls from the demand side because housing prices are already so piercing.”

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