Japan Falls into Third Quarter Recession

One of the world’s largest economies, the Japanese economy slipped into recession in the third quarter with GDP shrank by an annualized 1.6% in the three months ended September.

According to Japan’s Cabinet Office, on a quarterly basis, Japan's GDP declined by 0.4% as business investment slipped. The result was much worse than the 2.2% expansion expected by economists.

The disappointing result comes as Japan faces a full slate of questions over tax policy and the country's plan for economic revival.

Japan's consumption tax was increased to 8% in April in a bid to improve the country's fiscal position, and the government is now agonizing over whether it should implement an additional bump to 10%.

The first increase set off a boom and bust cycle that wiped out growth in the second quarter, as consumers drastically changed their spending patterns.