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Japan Downgrades Economic Outlook Amid Weak Domestic Demand

First contraction in three quarters observed as capital spending and private consumption fall, prompting government response.

Overview

  • Japan's government has downgraded its economic outlook for the first time in 10 months due to weak domestic demand.
  • The Cabinet Office has cut its view on capital spending, noting a pause in the recent pick-up due to slowing global growth, particularly in China.
  • Japan's economy contracted for the first time in three quarters in July-September, with GDP falling at an annual real rate of 2.1%.
  • Despite improvements in business conditions and firms' earnings, these are not translating into wages and investment.
  • The government has compiled a package of measures worth more than 17 trillion yen ($113 billion) to mitigate the impact of inflation.