I don't know what you call GDP coming in negative 1.6 percent for the quarter when the consensus was growth of 2.1 percent, but it certainly is a shock. That, following a 7.1 percent fall in the second quarter! The first quarter showed an increase of 6.7 percent.
The second planned sales tax hike is now unlikely to happen. More importantly, Prime Minister Shinzo Abe is not going to declare Abenomics a failure; if anything this will likely accelerate demands for even more monetary easing.
According to Davy Research, the bulk of the decline was caused by business destocking, a temporary response to the dip in consumer spending in the second quarter.
Maybe. But Japan is a big producer of machinery used in Chinese factories. That is stoking some concern that China may have slowed down its order rate, raising questions about China's 7 percent GDP.