Japan's economy sinks into contraction as spending, investment decline

abcnews.go.com:

Japan has reported that its economy contracted at a 2.1% annual pace in July-September as consumption and investment weakened

TOKYO — Japan's economy contracted at a 2.1% annual pace in July-September as consumption and investment weakened, the government said Wednesday.

Weak wage growth in the world’s third-largest economy also sapped its vitality, the Cabinet Office said. In quarterly terms, the economy contracted by 0.5%.

The numbers were unexpectedly weak. Private consumption shrank an annualized 0.2%. Corporate investment decreased 2.5%. With investment and demand weakening in other major economies, “we expect GDP growth to slow from 1.7% this year to 0.5% in 2024,” said Marcel Thieliant of Capital Economics.

The economy grew at a revised annual pace of 4.5% in April-June and 3.7% in the January-March, the latest figures showed. The earlier estimate for the April-June quarter was of a 6% annual expansion.

The last quarter's performance was far worse than what had been expected, according to the financial services company ING, which had forecast an annual contraction of 0.5%.

“Most of the miss in the consensus forecast came from weaker-than-expected domestic demand items, such as consumer spending, business investment and inventory accumulation,” Robert Carnell, ING's head of research for the Asia-Pacific area, said in a report.

Prime Minister Fumio Kishida recently announced a stimulus package of more than 17 trillion yen ($113 billion) that includes tax breaks and benefits for low-income households that have struggled as prices for many necessities have surged due to global inflation and the weak yen.

Economic activity in previous quarters was helped by recoveries in inbound tourism and exports. Social