Japan's economy slips into recession, raises BOJ policy uncertainty
Japan's economy slipped into a recession as it unexpectedly shrank for a second straight quarter on weak domestic demand, data showed on Thursday, raising uncertainty about the central bank's plans to exit its ultra-easy policy sometime this year.
The surprisingly weak performance saw Japan lose its title as the world's third-largest economy, replaced by Germany.
Gross domestic product (GDP) fell an annualised 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed. It compared with a median market forecast of a 1.4% increase.
Two consecutive quarters of contraction are typically considered the definition of a technical recession.
The weak data may cast doubt on the Bank of Japan's forecast that rising wages will underpin consumption, and justify phasing out its massive monetary stimulus.
«There's a risk the economy could shrink yet again in the January-March quarter due to slowing global growth, weak domestic demand and the impact of the New Year quake in western Japan,» said Takuji Aida, chief economist at Credit Agricole.
«The BOJ could be forced to sharply downgrade its rosy GDP forecasts» for 2023 and 2024, he added.
The yen was little changed following the release of the data and last stood at 150.42 per dollar, pinned near a three-month low hit earlier in the week.
The Nikkei rose 1%, reversing some of its losses made from the previous session, possibly on expectations the BOJ may continue with
