Japan's Economy Slips into Recession Amid Tensions with China, Stimulus Package Looms
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Japan's economy contracted by 0.4% in the three months leading up to September, according to official data released on Monday. This marks the first recession since the first quarter of the year, despite beating market expectations of a 0.6% decline. The country's new Prime Minister, Sanae Takaichi, is preparing a major stimulus package, which is expected to be worth over 17 trillion yen, surpassing initial estimates. The economic downturn is largely attributed to weak residential investment and a decline in exports, which had previously shown signs of resilience. However, economists warn that tensions with China, following Takaichi's comments on Taiwan, pose a significant risk to Japan's economy. China's ambassador to Japan was summoned last week, and Beijing has advised its citizens to avoid traveling to Japan. The stimulus package, set to be approved by the cabinet on Friday, aims to boost economic growth and mitigate the impact of the recession. While the package's value remains uncertain, Finance Minister Satsuki Katayama has confirmed that it will be "well above" 17 trillion yen. Economists caution that the package's effectiveness will depend on its implementation and potential risks, including China's possible retaliatory measures. As Japan's economy struggles to recover, tensions with China are escalating, and the country's key trading partners are facing uncertainty. The situation is further complicated by historical mistrust and territorial rivalries between the two nations. The impact of these tensions on Japan's economy remains to be seen, but experts warn that the country's economic resilience is being tested like never before.
