Japan's economy has contracted for two consecutive quarters — for the first time since the three straight quarters of negative GDP growth through December 2001. Economic and Fiscal Policy Minister Kaoru Yosano admitted that the economy is in a recessionary phase.
Although the government decided on a ¥26.9 trillion economic stimulus package in October, it has meandered in working out the details of ¥2 trillion in cash benefits for households. It has not yet submitted a second supplementary budget for fiscal 2008 to the Diet. It must be blamed for its slowness to act.
Real GDP in the July-September period shrank by 0.1 percent from the previous quarter, or an annualized 0.4 percent, following a 0.9 percent (annualized 3.7 percent) drop in the April-June period. Although housing investment increased 4.0 percent, consumer spending and exports rose only 0.3 percent and 0.7 percent, respectively. Internal demand pushed up real GDP 0.1 percent while external demand (exports minus imports) pulled down real GDP by 0.2 percent.