Analysts: Japan's economy has contracted for the first time in six quarters, complicating the central bank's rate hike path

Japan's economy has contracted for the first time in six quarters, complicating the Bank of Japan's timeline for its next interest rate hike. Preliminary government data released on Monday showed that Japan's real GDP shrank by 0.4% quarter-on-quarter in the third quarter, marking the first contraction since the first quarter of 2024, with a year-on-year decline of 1.8%. The economic weakness may support the view that the Bank of Japan will wait until next year to take any policy measures.

Specifically, from July to September, external demand contributed to a 0.2 percentage point decline in the country's GDP, reflecting the impact of increased tariffs from the United States. Housing investment was another significant drag, falling by 9.4% from the previous quarter. Nevertheless, economists believe that this decline is due to temporary factors related to regulatory changes, and they expect the market to recover. (Jin Shi)