Japan economy news: GDP shrinks by 1.4 percent in Q4 2015

The Japanese economy contracted once again during the last quarter of 2015, according to an announcement by the Japanese government. The 1.4 percent decline was higher than the 1.2 percent prediction, making it the steepest since the 1974 oil crisis that rocked the nation and the world.

Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs, said, "Since October economic indicators have deteriorated at a pace that defies any rule of thumb."

The decline, according to ABC News, is much larger than the 3.8 percent in the U.S. and the 1.2 percent in Europe.  

The decline was largely due to weak domestic demand and slower exports. Private consumption makes up 60 percent of the country's gross domestic product; however, it slumped by 0.8 percent during the last quarter of 2015. Another cause for the decline is the yen getting stronger against the U.S. dollar. This has hurt the export industry because goods produced in Japan have become more expensive abroad, affecting their profit. 

According to CNN Money, the Bank of Japan has tried to resolve this problem by offering investors a negative interest rate, which is a first in the history of Japan. This temporarily weakened the yen, but it climbed sharply again after the brief reprieve.

Tobias Harris, a political risk analyst at Teneo, is quoted by The Guardian as saying, "To the extent that the stronger yen is driven by external factors - slowing growth in China and its impact on emerging markets, and weak demand in other advanced economies - any additional measures undertaken by the Abe administration or the BoJ may at best have a limited impact."

Despite this gloomy and depressing news, there was a glimmer of hope as the stocks rose by 7.2 percent in Tokyo on Monday. The economic data posted on Reuters showed a 1.4 percent increase in capital expenditure as well as a .01 percent on net exports. Economic experts say that if Japan's economy will be based on a full-year inflation-adjusted terms, the Japanese economy has somewhat grown by 0.4 percent last year.