Japan's Economy Contracts Amid Recession Risks and Weak Yen

Japan's economy contracted by 2.1% in the third quarter, ending two consecutive quarters of expansion, due to weak consumption and exports. The lack of a growth driver and intensifying global headwinds, including slowing demand from China, pose risks of a recession. Stubbornly high inflation is impacting household spending, while manufacturers are also affected by slowing global demand. The weak growth and slowing inflation could delay the Bank of Japan's exit from negative interest rates. The disappointing GDP reading highlights the country's ongoing challenges, despite a post-pandemic rebound in domestic activity.