Japan's Economy Faces Setback: Exports Fall Amid U.S. Tariffs

Japan's economy contracted by nearly 2% in Q3 due to declining exports, particularly in the automotive sector, amid U.S. tariffs. While the dip is viewed as temporary, it has prompted discussions on monetary policies and stimulated Government plans for an economic stimulus exceeding 17 trillion yen.

Japan's economy faced a contraction of 2% in the third quarter, primarily due to a decline in exports, with automakers being heavily impacted by the newly imposed U.S. tariffs.

Economists suggest this setback is temporary, not signaling a recession, and forecast a gradual recovery in the coming years, despite weak underlying momentum.

The weak economic data has intensified discussions about Japan's monetary policies, with calls for a significant stimulus package exceeding 17 trillion yen, aimed at counteracting rising living costs and boosting consumption.

(With inputs from agencies.)