Japan’s economy shrank in the three months through September, the government confirmed in a revised report, giving some justification for Prime Minister Sanae Takaichi’s stimulus package announced last month.
Gross domestic product fell at an annualized pace of 2.3% in the third quarter, as revised figures showed business spending and housing investment came in weaker than preliminary figures. The contraction was deeper than the initial reading of a 1.8% fall, and was the first in six quarters.
The lackluster results back up Takaichi’s stimulus package, which featured the largest fresh spending since the pandemic. With a contraction confirmed at the start of her tenure, the data could give ammunition for Takaichi to keep spending in the future, as private consumption remains weak and other parts of the economy lack momentum. The data add an element of complexity to the Bank of Japan’s upcoming policy decision later next week, but likely won’t derail it from its gradual hiking path.