Tokyo [Japan], February 15 : Japan's economy has contracted unexpectedly, pushing the country into recession and causing it to lose its position as the world's third largest economy to Germany, reported CNN.
Gross domestic product shrank at an annualized pace of 0.4 per cent in the last three months of 2023, the Cabinet Office said on Thursday, after having contracted in the previous quarter.
A technical recession is often defined as two consecutive quarters of negative growth in the real GDP.
According to the news report, the Asian economy slipped into recession because of weak domestic consumption. Private consumption which accounts for half of the economy declined by 0.2 per cent, as Japanese consumers battled higher prices for food, fuel and other goods.
Japan imports 94 per cent of its energy requirements and 63 per cent of its food, so the weak yen significantly contributes to a higher cost of living, Neil Newman, a Tokyo-based strategist at Japanmacro told CNN.
Weak currency typically makes imports costlier.
"Private consumption was particularly weak, [and] market expectations was for it to be flat," Newman was quoted as saying. "Unfortunately this will get worse in January following the Sea of Japan earthquake. People stop spending in times of natural disasters."
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