JAPAN’S economy slid back into recession in the July-September period as uncertainty over the overseas outlook hurt business investment, keeping policymakers under pressure to deploy new stimulus measures to support a fragile recovery.

    A rebound in private consumption and exports offered some hope Japan’s economy is emerging from the doldrums, despite slowing Chinese demand and the pain households are feeling from rising imported food prices.

    Still, many analysts expect the economy to grow only moderately in the current quarter as companies remain hesitant to use their record profits for wage hikes, underscoring the challenges Premier Shinzo Abe faces in pulling Japan sustainably out of stagnation with his “Abenomics” stimulus policies.

    “A big drop in inventory was the largest factor behind a third-quarter contraction. Weak capital spending was a concern, but excluding these factors, the gross domestic product figures were not so bad,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

    The world’s third-largest economy shrank an annualized 0.8 percent in the July-September period, more than a median market forecast for a 0.2 percent contraction, government data showed yesterday.

    That followed a revized 0.7 percent contraction in the April-June period, which was the first decline in three quarters.

    Japan thus slipped back into technical recession, which is defined as two consecutive quarters of contraction, after suffering one last year due to the hit on consumer spending from a sales tax hike in April 2014.

    The data may affect debate among policymakers on how much fiscal spending should be earmarked in a supplementary budget, which may be compiled this fiscal year. (SD-Agencies)