The Japanese economy unexpectedly shrank in the third quarter, preliminary data showed on Tuesday, as worsening inflation levels and further depreciation in the yen severely undercut economic growth in the country.
Gross domestic product (GDP) fell 0.3% in the three months to September 30, data from the Cabinet Office showed, ducking expectations for growth of 0.3% and falling well below the previous quarter’s reading of 1.1%.
On an annualized basis, Japanese GDP shrank 1.2%, missing expectations for growth of 1.1% and shrinking substantially from a 4.6% reading in the prior quarter.
The reading reflects the increasing pressure on the Japanese economy from rising inflation, with the core consumer price index hitting an eight-year high in September. This, coupled with a deep depreciation in the yen, has kept consumer spending- a major driver of the Japanese economy- largely subdued this year.
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