Japan's economy shrank in the fourth quarter of 2015, official data
showed on Monday, to deal a new blow to the policy of incentives for
growth of Prime Minister Shinzo Abe (the "Abenomics").
The retreat will exacerbate the controversy over the actions of the Bank of Japan (BoJ, central bank), which in late January set negative interest rates as a desperate attempt to energize the third world economy.
The weak demand in key areas such as selling cars or appliances explains the contraction of 0.4% in the October-December period.
Since the increase in VAT in April 2014, Japan quarters of modest growth alternating with periods of contraction. In fact it was the second year in retreat of 2015, but the year ended with modest growth of 0.4%.
The government downplayed the data, provisional, in the fourth quarter, saying that "the fundamentals (of the economy) remain good". But for analysts this is a reversal of the economic policies of Abe ( "Abenomics").
The strategy of the prime minister and was being battered from earlier this year by the strong yen, which affects the export sector and the collapse of the financial markets.
"The latest data show the difficulty of asserting Abe's government has managed to build a virtuous circle of rising incomes, wages and investment," said Tobias Harris, risk analyst at US consultancy Teneo.
"Growth in Japan is depending too much on exports, which were affected by the slowdown in China and its impact on the global economy," he added.
The Nikkei 225 index of the Tokyo Stock Exchange seemed to ignore these data, and on Monday was a dramatic increase of more than 7%, attributed by analysts to buy at bargain prices after hacatombe last week when the Japanese securities they lost more than 11%.
Even with skyrocketing Monday, the Nikkei recorded a decline of nearly 16% so far this year.
The retreat will exacerbate the controversy over the actions of the Bank of Japan (BoJ, central bank), which in late January set negative interest rates as a desperate attempt to energize the third world economy.
The weak demand in key areas such as selling cars or appliances explains the contraction of 0.4% in the October-December period.
Since the increase in VAT in April 2014, Japan quarters of modest growth alternating with periods of contraction. In fact it was the second year in retreat of 2015, but the year ended with modest growth of 0.4%.
The government downplayed the data, provisional, in the fourth quarter, saying that "the fundamentals (of the economy) remain good". But for analysts this is a reversal of the economic policies of Abe ( "Abenomics").
The strategy of the prime minister and was being battered from earlier this year by the strong yen, which affects the export sector and the collapse of the financial markets.
"The latest data show the difficulty of asserting Abe's government has managed to build a virtuous circle of rising incomes, wages and investment," said Tobias Harris, risk analyst at US consultancy Teneo.
"Growth in Japan is depending too much on exports, which were affected by the slowdown in China and its impact on the global economy," he added.
The Nikkei 225 index of the Tokyo Stock Exchange seemed to ignore these data, and on Monday was a dramatic increase of more than 7%, attributed by analysts to buy at bargain prices after hacatombe last week when the Japanese securities they lost more than 11%.
Even with skyrocketing Monday, the Nikkei recorded a decline of nearly 16% so far this year.
Dilemmas and rumorsThe yen, which last week had strengthened by 4% against the dollar weakened again on Monday as rumors that the BoJ preparing further monetary easing, which would throw new money into the markets, and that authorities were intervening in the markets to curb the appreciation of the Japanese currency.
Abe held on Friday an emergency meeting with President of the BoJ, Haruhiko Kuroda, given the extreme volatility of world markets and the strengthening of the yen.
The BoJ surprised in late January by adopting a negative interest rates, a move intended to encourage banks to invest in the real economy, rather than keep the money in dormant deposits.
But with flagging growth and BoJ fighting for inflation approaches its ambitious target of 2% a year, Abe must decide whether to raise the VAT returns.
The government will await the outcome of wage negotiations in the spring, to see if companies are willing to pay more to employees, thereby giving hope for a recovery in consumption.
In the last quarter of 2015, household consumption decreased by 0.5% over the previous quarter. Non-residential business investment meanwhile progressed slightly (+ 0.2%).
Foreign trade contributed positively to change GDP growth (+0.1), despite a drop in exports (-0.2%).