Japan's latest GDP data for the second quarter of this year confirms the underlying weakness of consumer demand and the seemingly limited scope of the benefits from the economic policies of the administration of Prime Minister Shinzo Abe. The first contraction of gross domestic product in three quarters may be a temporary dip, as economic growth is widely predicted to return to positive territory in the July-September period. Still, policymakers should think again why the household appetite to spend remains weak despite robust corporate earnings and wage hikes at large firms.

The economy shrank by an annualized 1.6 percent in real terms in the April-June period from the previous quarter as consumer spending, which accounts for roughly 60 percent of the nation's GDP, fell 0.8 percent for the first decline since the same period of last year and exports plunged 4.4 percent for the first decline in six quarters due to sluggish shipments to Asia and U.S. markets.

An average forecast by private-sector think tanks points to a GDP growth of an annualized 1.8 percent in the three months to September, with exports expected to pick up and the intense summer heat projected to have pushed up sales of seasonal goods. However, concern lingers over the prospect of export growth as signs abound indicating a slowdown of the Chinese economy, as illustrated by the devaluations of its currency last week.