Japan’s economy shrank in the second quarter, marking the consecutive failures of government policy Shinzo Abe, says Reuters. In the period April-June gross domestic product (GDP) shrank by 1.6% compared to the same quarter of 2014. This decrease is the first three quarters in the first three months of the year was achieved growth of 4.5%. The decrease in GDP is still lower than the estimates analysts who had expected a decline of 1.9%. On a quarterly basis, the economy contracted by 0.4% instead of the expected 0.5%.
The main factor for the decline in consumer spending decrease by 0.8% compared to the previous quarter – twice more than expected. Private consumption is responsible for about 60% of economic activity in the country. Economy Minister Akira Amari and citing weak exports to major markets China and the US, as well as poor weather conditions during the period.
The disappointing data on economic growth followed a series of other weak statistics, including exports and factory production. This puts into question the development prospects of the economy in the rest of the year and will likely put pressure on the government to introduce changes in its reform program, including large cash incentives. The economic slowdown in China and the negative effect on the entire region also reduce the chances of significant recovery of growth in the current quarter.