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The Japanese economic system has experienced a decline for the initial time in a year and a half, primarily driven by falling exports due to recent American trade duties.

Group of Seven Economic Standings

Japan has become the initial G7 country to disclose an output shrinkage in the latest quarter.

With the United States still needing to release its GDP figures for the third quarter, the present G7 growth standings show:

• The French economy: +0.5% quarterly growth
• UK: 0.1 percent
• Canada: 0.1 percent (preliminary figure)
• German economy: 0%
• Italy: no growth
• Japan: negative 0.4 percent

Travel Stocks Slump amid Diplomatic Dispute with Beijing

Alongside the GDP decline, Japan is experiencing an intensifying political dispute with China concerning Taiwan.

Stocks in Japanese tourism and consumer firms have declined significantly after China recommended its residents to avoid visiting to Japan.

This action by Beijing heightened a political dispute that was initiated by comments from Japan's recently appointed PM about the potential of deploying forces in the case of a potential Chinese attack on Taiwan.

The situation caused a wave of selling across Japanese leisure stocks.

• Oriental Land shares fell by 5.7 percent
• Isetan Mitsukoshi tumbled by 11.3%
• Japan Airlines declined by 3.75%

"The ongoing dispute over Taiwan and Beijing's advisory discouraging travel to Japan brings near-term difficulties for consumer-facing sectors.

"Chinese visitors account for roughly 25% of Japan's international visitors, making department stores, high-end shopping, and hospitality especially vulnerable."

Economic Contraction Breakdown

Japan's gross domestic product dropped by 0.4% in the July-September quarter, as industrial overseas shipments were impacted by tariffs imposed by the United States recently.

Exports were a primary driver of the decline, dropping by 1.2% compared with the April-June quarter, and were 4.5 percent lower than a the same period last year.

Previously, the American government had threatened Japan with a additional 25 percent tariff on its products, which was later lowered to 15 percent when the two nations concluded a trade agreement.

Consumer spending also declined, by 0.3% compared to the previous quarter.

On an annualized basis, Japan's GDP shrank by 1.8% in the quarter through September.

"Japan's economy was strong in the first half of this year and the latest GDP data showed that momentum is halted temporarily.

I anticipate Japan's economy to be back on a moderate recovery trend going forward."

The US administration has lately recognized the impact of tariffs on US consumers, lowering duties on imported food products including meat, tomatoes, beverages and bananas amid growing concerns about increasing costs.

Business Calendar

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• 15:00 Greenwich Mean Time: US construction spending data for August