Japan economy shrinks amid global economic slowdown

PanARMENIAN.Net - Japan's economy contracted in the July to September quarter, as a global economic slowdown and anti-Japan protests in China hurt its exports, while domestic consumption remained subdued.Gross domestic product (GDP) contracted 3.5% from a year earlier, BBC News reported.

Compared with the previous three months, the economy contracted 0.9%.

The weak data is likely to put pressure on the government to boost stimulus measures to spur growth.

"There are risks from both domestic and external factors," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. "As such, the Bank of Japan (BOJ) will stand ready to ease monetary policy again, and it would not surprise me if the BOJ eased again by the end of this year."

Japan's economy, the world's third-largest, has been trying to recover from last year's earthquake and tsunami, which caused widespread destruction in the country. However, its recovery has been hampered by a combination of factors.

Faced with slowing external and domestic demand, Japan's central bank has taken various steps to try and spur growth.

Earlier this month, the BOJ extended its asset purchase program by 11 trillion yen ($138bn; £86bn). Under the program, the central bank buys bonds to keep long-term borrowing costs down.

It also said that it will offer unlimited loans to banks to encourage lending in an effort to boost domestic consumption.

However, analysts said the measures were unlikely to have a major effect, not least because firms were holding back expansion plans in the wake of an uncertain economic environment.