Japan has fallen back into recession for the second time in PM Shinzo Abe’s tenure, a piece of economic news that should worry Washington as well as Tokyo. Agence France-Press reports:
The Cabinet Office said Monday that gross domestic product (GDP) shrank 0.2 percent in the July-September period, or an annualised contraction of 0.8 percent, marking the second straight quarterly decline — considered a technical recession.
It was also below the 0.1 percent forecast in a Bloomberg News survey […]
The data offer a mixed snapshot of the economy, with improving consumption countered by weakening corporate investment caused by uncertainty over the global outlook, particularly China, experts said.
Reading economic data is a tricky business, and we wouldn’t want to make any confident prediction about the future course of the Japanese economy, or the fate of Abe’s economic reforms, known as Abenomics. The death of Abenomics has been prematurely announced before, as have reports of its vindication. But whatever this latest news does or doesn’t tell us about Abenomics’ future, a technical recession in Japan, even if it should prove temporary, is unwelcome news for the U.S. Washington has a vested interest in seeing Japan prosperous and strong enough to act as an effective counterweight to China. And what worries us is that the boost Japan may very well have little to do with Abe: If China recovers, Japan may too; if not, the future looks bleaker.
Still, for all Abenomics’ troubles, there is also some good news coming out of Japan, as the prime minister’s militarization efforts continue to bear fruit. The latest: Tokyo and Manila have agreed on an aid program to help bolster the Philippines’ military. Although the details have yet to be hammered out, early reports suggest Japan may donate old aircraft to the Philippines for use in the South China Sea. The equipment is unlikely seriously to threaten China, but increasing ties between powers opposed to Chinese expansionism are a good thing.