Japan, for the fourth time in five years, slipped into a technical recession between July and September, highlighting Prime Minister Shinzo Abe's "Abenomics" policies have struggled to revive the nation's long-suffering economy.
The nation's Cabinet Office announced Monday that the gross domestic product (GDP), a measure of a nation's goods and services, shrank an annual 0.8 percent after a 0.7 percent contraction in the prior quarter, officially placing the world's third-largest economy into recession, according to CNN.
Tokyo financial markets closed following the announcement Monday, with the 225-issue Nikkei average losing 1.04 percent, closing at 19,393.69, and the Topix index of all first-section issues dropped 0.9 percent, closing at 1,571.53.
Despite the gloomy numbers, Minister of State for Economic and Fiscal Policy Akira Amari said at a press conference Monday that Japan's recovery remained on track despite risks in overseas economies.
"The problem is that capital spending is not robust, which indicates that the mindset of company executives remains deflationary," Amari said at the news conference, according to USA Today.
On the other hand, various financial analysts argue Monday's data shows that the "Abenomics" plan - a bond-buying campaign, coupled with structural reforms and stimulus from the central government - has failed to dramatically boost growth.
"Abenomics' first two arrows of monetary and fiscal stimulus were meant to buy time, but Japan failed to make progress with painful reforms needed to boost its growth potential," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities, according to Reuters.
"Without reform (the 'third arrow'), the economy's growth potential remains low, making it vulnerable to shocks and to suffering recessions more often," he concluded.
These developments have come as little surprise to Bank of Japan officials, who had largely factored in the recession in future growth estimates, and now expects growth to recover in upcoming quarters as consumption and factory show signs of a pick-up.
The data will be closely scrutinized by the Bank of Japan, but analysts believe it is unlikely to announce further measures to step up stimulus efforts at the end of a policy meeting this week, instead expecting the government to wait until January.
