Japan’s economy has rebounded. It expanding by 1.5 percent in the third quarter and six percent year on year.
It is recovering from a recession triggered by March’s earthquake and tsunami as reconstruction after the disaster supports economic growth.
However economists said that pace will likely slow as the strong yen and weak global growth hit exports.
Some believe the economy may even shrink again as floods in Thailand — a major production base for Japanese manufacturers — disrupt production and as emerging economies cool.
“The situation surrounding Japan’s economy is increasingly severe due to weakening global economic recovery, effects of Thai floods and rapid yen rises,” Economics Minister Motohisa Furukawa told reporters. “We’ll continue to watch risks to the economy.”
One factor weighing on corporate sentiment is the strength of the yen, which hit a record high against the dollar of 75.31 late in October prompting authorities to intervene in markets to sell the currency.
Several car makers and electronics firms have warned they might be forced to move more production abroad to cope with the currency.