Abenomics, the much-vaunted economic policy of weakening the Yen and dumping cash on the economy, is not working.
That’s the verdict that has now come in after the Japanese cabinet Office this morning released the third quarter GDP which shocked the market with a print of -0.4% from July to September against market expectations of a rise of 0.5%.
This is the second quarter in a row that GDP has contracted after the second quarter’s print of -1.9%.
Japan is officially in recession.
The only good news is the contraction falling from -1.9% to -0.4% means the annualised rate of negative growth has fallen from -7.3% to -1.6%.
Both Nikkei futures and the yen weakened initially with the USDJPY exchange rate hiting 117 straight after the number. Both have retraced a little since, as traders recognise the expectations of the postponement of a planned sales tax hike must now be fulfilled.