Japanese economy shrinks as exports fall

Japan’s economy shrank at an annualised pace of 1.6% between April and June as exports slumped and consumers cut back spending, adding pressure on prime minister Shinzo Abe to step up his policy drive to lift the economy out of decades of deflation.

China’s economic slowdown and its impact on its Asian neighbours has also heightened the chance that any rebound in growth in July-September will be modest, analysts say. The gloomy data adds to signs that Japan’s economy is at a standstill and raises pressure on policymakers to offer additional monetary or fiscal stimulus later this year.

The contraction in GDP compared with a median market forecast of a 1.9% fall and followed a revised expansion of 4.5% in the first quarter, Cabinet Office data showed yesterday.