Japan’s economy shrinks as US tariff hit looms

Japan's economy has contracted by 0.2% in the latest quarter, exceeding market forecasts that predicted a 0.1% decline. This marks a significant moment for the world's third-largest economy, which is grappling with both internal and external challenges. The unexpected shrinkage raises concerns about the nation's economic resilience, especially as global trade tensions continue to simmer. Private consumption, a key driver of Japan's economic growth, showed signs of weakening, contributing to the downturn. Consumers are tightening their purse strings amid rising costs and economic uncertainty. This decline in spending comes at a delicate time, as businesses brace for potential impacts from looming U.S. tariffs, which could further strain the economy by disrupting trade and increasing costs for Japanese exporters. As Japan navigates these choppy economic waters, policymakers face mounting pressure to implement strategies that could stabilize growth. The government may need to consider boosting fiscal stimulus or revisiting monetary policies to encourage spending and investment. Meanwhile, the looming threat of U.S. tariffs underscores the importance of diplomatic efforts to mitigate trade tensions and safeguard Japan's economic future.

— Authored by Next24 Live