Japanese economy contracts by 0.9 in third quarter

Japanese economy contracted by 0.9% in the third quarter of the current year 2012 compared to previous quarter due to global economic slowdown and lower export demand. The annualized rate of economic contraction stood at 3.5% compared to same quarter last year.

The main reason behind the contraction is falling export demand of Japanese products in the western developed economies and China. Recent global economic slowdown and euro zone recession have affected export to western countries. But the biggest blow came from recent island related dispute with its biggest trading partner china which affected Japan-s trade relationship with the neighbour country. At the same time depreciating Yen has also affected the pricing competitiveness of the Japanese products in the world market.

After this contraction, Japanese economy may be heading for recession in the current quarter and government needs to provide more stimulus measures to boost growth.