The Cabinet Office has announced that Japan's gross domestic product in the April-June quarter shrank 0.6 percent, or an annualized 2.4 percent, from the previous quarter in real terms — the first drop in four quarters and the largest drop since the July-September quarter of 2001 when the economy shrank 1.1 percent.
Exports and corporate capital investment fell as the U.S. and European economies slowed down and soaring prices of oil and raw materials began to affect Japanese business enterprises. Exports decreased 2.3 percent from the previous quarter — representing the first fall in 13 quarters. Net exports neither pulled down nor pushed up gross domestic product. Corporate capital spending dropped for the second consecutive quarter, falling 0.2 percent.
Consumer spending, which accounts for about 55 percent of the nation's GDP, fell 0.5 percent, marking the first decline since the July-September quarter of 2006 and shrinking GDP by 0.3 percent. Housing starts slowed and housing investment dropped 3.4 percent, contracting GDP by 0.1 percent.