Japan economic data revision suggests recession

Japanese carmakers have seen their sales in China slide after the anti-Japan protests

Revised growth figures for Japan have suggested that the world's third-largest economy is in recession.

The economy shrank by 0.9% in the July-September quarter, while the April-June quarter was revised from 0.1% growth to show a contraction of 0.03%.

That means that Japan is technically in recession, having contracted for two quarters in a row.

Japan has been hit hard by a strong yen that dents exports and a diplomatic row with major trade partner China.

Despite the figures pointing to a recession, the Japanese government, the official arbiter of such matters, has urged caution on interpreting the figures.

Tomo Kinoshita, chief economist at Nomura Securities in Tokyo, said: "We had already said Japan was in a recession. Today's number strengthened our case."

During the third quarter, Japan shrank by the equivalent to an annualised drop in gross domestic product (GDP) of 3.5%.

Economic woes

Japan's economy has been trying to recover from last year's earthquake and tsunami, which caused widespread destruction in the country.

However, its recovery has been hampered by a combination of factors.

A slowdown in key markets, such as the US and eurozone has hurt demand for its exports, one of the biggest drivers of Japanese growth.

Slowing growth and anti-Japan protests in China - Japan's biggest trading partner - have also affected its export sector.

To add to its woes, the debt crisis in the eurozone and weak recovery in the US have seen many investors flock to haven assets such as the yen, resulting in the Japanese currency strengthening against the US dollar and the euro.

Last month, Japanese lawmakers approved another stimulus package to revive growth, as the flagging economy becomes a key issue in the upcoming general election.

The money, totalling 880bn yen ($10.7bn; £6.7bn), will be used mainly to create employment and support small businesses, the cabinet said.

The central bank is also carrying out an asset purchase programme whereby it buys bonds to keep long-term borrowing costs down.