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The Japanese economic system has experienced a decline for the first time in six quarters, primarily caused by declining exports as a result of recent US trade duties.

G7 Growth Rankings

The Japanese economy has become the initial G7 economy to announce an economic contraction in the latest three-month period.

As the United States yet to release its GDP data for the third quarter, the present Group of Seven economic leaderboard indicate:

• France: 0.5 percent quarterly growth
• United Kingdom: 0.1 percent
• Canadian economy: 0.1 percent (preliminary figure)
• German economy: 0%
• Italian economy: no growth
• Japan: -0.4%

Tourism Stocks Decline during Political Rift with Beijing

Alongside the economic contraction, Japan is experiencing an escalating political conflict with China regarding Taiwan.

Shares in Japanese travel and consumer companies have fallen significantly after China advised its nationals to refrain from visiting to Japan.

This decision by Beijing escalated a political dispute that was sparked by remarks from Tokyo's recently appointed PM about the potential of sending troops in the event of a potential Chinese attack on Taiwan.

The development triggered a wave of selling across Japan's tourism-related shares.

• Oriental Land shares fell by 5.7 percent
• The department store chain plummeted by 11.3%
• The national carrier declined by 3.75%

"The China-Japan tension over Taiwan and China's travel warning discouraging travel to Japan brings short-term difficulties for retail and hospitality sectors.

"Chinese visitors account for roughly 25 percent of Japan's inbound traffic, making department stores, high-end shopping, and tourism services particularly at risk."

GDP Contraction Details

Japanese GDP dropped by 0.4 percent in the third quarter, as industrial overseas shipments were hit by duties imposed by the US this year.

Overseas shipments were a key driver of the decline, falling by 1.2% compared with the previous quarter, and were 4.5% lower than a year ago.

Previously, the US administration had proposed Japan with a new 25 percent tariff on its products, which was later lowered to 15 percent when the two nations reached a trade deal.

Private demand also declined, by 0.3% quarter-on-quarter.

On an annual basis, Japan's real gross domestic product contracted by 1.8 percent in the three months through September.

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

I anticipate Japan's economy to be returning on a gradual growth trend going forward."

The White House has lately recognized the impact of tariffs on Americans, lowering duties on food imports including beef, produce, beverages and bananas amid increasing concerns about increasing costs.

Business Calendar

• 08:00 Greenwich Mean Time: Swiss GDP report for Q3
• 15:00 Greenwich Mean Time: US construction spending data for August