JAPAN’S economy probably slipped into technical recession in July-September due to a drop in capital spending and soft external demand and private consumption, a Reuters poll showed.

    The world’s third-largest economy is seen to have contracted at an annualized rate of 0.2 percent in the third quarter, following a 1.2 percent contraction in April-June, the poll of 19 economists showed. A technical recession is defined as two consecutive quarters of economic contraction.

    This would translate into a quarterly contraction of 0.1 percent, keeping policymakers under pressure to deploy monetary and fiscal stimulus in the coming months to firms up the flagging economy.

    Despite slowing growth and inflation, the Bank of Japan is in no mood to ease policy further anytime soon, arguing that the economy remains on track for a moderate recovery although a global slowdown poses large risks to the economy.

    Analysts are closely watching the third-quarter gross domestic product (GDP) data for clues on the possible size of any additional fiscal stimulus.

    Japanese Prime Minister Shinzo Abe’s government is considering compiling an extra budget for the current fiscal year to shore up demand.

    The GDP data are due to be released by the Cabinet Office on Nov. 16.(SD-Agencies)