In a surprise, Japanese economy falls into recession

TOKYO, Nov. 17 (UPI) -- Japan's gross domestic product fell in the third quarter of 2014, which, coupled with a second quarter decline, indicates its economy is in recession.

Data indicated an annualized 1.6 percent decline in the world's third-largest economy after predictions of a 2.1 percent rise. Coupled with an annualized 7.3 percent decline in the second quarter -- the largest since a tsunami an earthquake struck Japan in March 2011 -- the two consecutive declines indicated a recession.

Private consumption, 60 percent of Japan's economy, rose only 0.4 percent in the third quarter, an indication a national sales tax, installed in April, is having an effect on purchases. The sales tax, of five percent, was installed in April, and rose to eight percent in the third quarter.

Prime Minister Shinzo Abe is expected to call for a new election and a delay in the implementation of bringing the sales tax to 10 percent since the economy is weak.

"The Japanese economy is in recession and has now contracted in three of the last four quarters. The most likely course is now a snap election in December in which voters choose, naturally enough, to delay the tax increase," said Glenn Levine, Moody's Analytics senior analysts, told the British Broadcasting Corp.

The Japanese yen fell to 117.04 to the dollar Monday in reaction to the news, before rising slightly to 115.69, and the Nikkei 225, Tokyo's major stock exchange, closed at 16,973.80, a three percent decline and the largest one-day drop since August.