Japan's economy has experienced a contraction for the first time in six quarters, primarily driven by falling overseas shipments due to recent US trade duties.
Japan has become the initial Group of Seven nation to announce an economic contraction in the most recent three-month period.
As the United States yet to publish its GDP figures for the third quarter, the present Group of Seven growth rankings display:
In addition to the GDP decline, Japan is dealing with an intensifying political dispute with China concerning Taiwan.
Stocks in Japanese tourism and consumer businesses have declined sharply after China urged its nationals to avoid visiting to Japan.
This decision by Beijing intensified a diplomatic feud that was triggered by remarks from Japan's new prime minister about the possibility of deploying forces in the event of a potential Chinese invasion on Taiwan.
The development caused a surge of sell-offs across Japan's leisure shares.
"The China-Japan dispute over Taiwan and China's advisory discouraging travel to Japan brings short-term challenges for consumer-facing sectors.
"Chinese visitors account for roughly 25% of Japan's inbound traffic, making department stores, high-end shopping, and hospitality especially vulnerable."
Japanese GDP dropped by 0.4 percent in the July-September quarter, as manufacturers' exports were hit by tariffs imposed by the United States this year.
Overseas shipments were a major factor of the decline, dropping by 1.2 percent compared with the previous quarter, and were 4.5% lower than a the same period last year.
Earlier this year, the American government had proposed Japan with a new 25% tariff on its goods, which was later reduced to 15% when the two countries reached a trade agreement.
Consumer spending also declined, by 0.3 percent quarter-on-quarter.
On an annualized basis, Japan's real gross domestic product shrank by 1.8 percent in the quarter through September.
"Japan's economy was strong in the initial six months of this year and today's GDP figures showed that growth is halted temporarily.
I expect Japan's economy to be returning on a gradual recovery trend going forward."
The US administration has recently acknowledged the effect of tariffs on Americans, lowering duties on imported food products including beef, tomatoes, coffee and bananas amid growing concerns about rising costs.
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