Japanese Prime Minister Shinzo Abe speaks during the G20 Turkey Leaders Summit on November 15, 2015 in Antalya, Turkey.Chris McGrath/Getty Images
Japan fell into its second technical recession in two years as the world's third-largest economy shrank in the third quarter, highlighting continuing weakness in Prime Minister Shinzo Abe's faltering Abenomics economic revival program.
On Monday, the government announced that Japan's gross domestic product shrank at an annualized rate of 0.8 per cent in the three months ended Sept. 30, compared with the same period last year. Economists had predicted a 0.2-per-cent contraction, but the deeper slump was a result of reduced inventories and falling business investment as Japan Inc. continued to hold back on concerns about slowing growth in China and the sluggish global economy.
Because of a revised 0.7-per-cent contraction in the previous quarter, that means Japan met the technical definition of a recession – the second in two years under Mr. Abe's economy-focused government. Although there is debate about whether recessions in Japan are truly indicative of economic malaise – or are the result of a prosperous, mature economy dealing with slower growth and a declining population – the fact that Japan is again in recession will raise doubts about Mr. Abe's efforts, and put more pressure on the Bank of Japan to execute even more stimulus measures.
Sayako Maruyama, a dental hygienist in Tokyo, has something in common with the Japanese economy: She's getting by okay, but is struggling to secure a prosperous, ideal future as she grapples with the realities of working in modern-day Japan. She worked full-time until she became pregnant and her employer effectively fired her – a reality still faced by many working women in Japan, despite Mr. Abe's push to keep women in the work force as Japan's rapidly aging population declines and its work force shrinks. Ms. Maruyama is now working part-time as she raises her three-year-old son with her husband and pays exorbitant fees for Tokyo daycare.
Ms. Murayama would prefer to have a second child and study for a new career, two things Mr. Abe desperately needs Japanese women to do if he wants his so-called Abenomics revival plan to ensure a sustainable economic recovery. But she and thousands of other Japanese women simply can't do that, highlighting some of the weakness underlying Japan's efforts to create long-term economic growth.
"If we had more support from the government or the city, I would have another child," and go back to work full-time, she said. "My husband is a policeman and has an irregular schedule. If I want to work more, he has to work less."
Situations like these – even if Mr. Abe has scored some successes in getting women to join and remain in the work force – are among the reasons it has been so hard to engineer a broad-based recovery in Japan. Soaring stock indexes and rising exports are often simply offset by reduced consumer spending and the unavoidable reality that a declining population means slower economic growth, despite attempts by Mr. Abe's government to fight against these trends.
One key result of Abenomics' so-called "three arrows" of fiscal stimulus, monetary easing and structural reforms has been a devaluing of the Japanese yen, which has benefited Japan's big exporters while making imports more expensive for ordinary people. The two-tiered nature of the recovery has left many working at Japan's larger exporters in a better position than those reliant on the domestic economy.
"I think the economy has improved," said Hiroshi Tanaka, a Japanese businessman who works for a large food-processing company, as he hustled through Tokyo station. "We're exporting a lot more food. We see a lot of overseas demand."
At the same time, a Japanese businessman who works for a domestic manufacturer of irrigation systems complained that things for his company were worse.
"I don't think Abenomics means anything. I don't think the economy has improved. The companies are getting more profits by cutting staff. For ordinary people like us, we don't feel any positive effects," the businessman said, declining to give his name. "We haven't seen any effect from Abenomics in our industry. Our company makes profits off of public works. And because of population decline, there has been no tax money for new projects."