Japan recession worse than initially thought

Japan recession worse than initially thought

Japan’s economic recession was worse than initially believed, according to a revised estimate calculated by the country’s Cabinet Office.

Initial estimates read that gross domestic product had dropped at an annualised rate of 1.6% between July and September, as a by-result of big cuts in companies’ inventories and falls in private investment.

Newly-revised estimates show that GDP actually slipped 1.9% with a contraction in spending by business twice as severe as first thought.

The news is sure to come as a big blow to Prime Minister Shinzo Abe who returned to power in December 2012 under the promise of overturning more than a decade of deflation. Abe only called a snap-election last month in the hope of resetting the clock on a four-year electoral cycle, arguing that his mix of policies – known as Abenomics – is “the only way” for Japan to return to steady growth.

However, analysts said that confirmation of another technical recession for Japan – its fourth since the Lehman crisis – is unlikely to affect the outcome of the poll on December 14th, the announcement of which caught the DPJ and other parties on the hop.

Estimates by the nation’s biggest newspapers suggest that the ruling Liberal Democratic party will retain its strong grip in power, potentially extending the two-thirds majority in Japan’s lower house of parliament it enjoys with its coalition partner, Komeito.

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