Japan's economy contracts again

Tokyo

JAPAN'S economy contracted at a sharper than feared 1.4 per cent real annual rate in the final quarter of last year, highlighting just how fragile recovery remains in the world's third largest economy depite strong fiscal and monetary stimulus applied under Prime Minister Shinzo Abe's "Abenomics" policies since 2012.

Consumer spending, which accounts for 60 per cent of Japan's gross domestic product (GDP) and exports both took a hit as domestic sentiment and the external environment deteriorated, suggesting that Mr Abe's 2 per cent annual growth target, and the Bank of Japan's 2 per cent annual inflation goal remain well out of reach.