-->economy deteriorated more severely than expected in the third quarter.

--> downturn is extended into a second consecutive three-month period and is putting the country in technical recession.

this has worsening many business confidence. With a reduction in business confidence, they will usually spend and invest less. this will deduce the GDP dramatically. this can be seen from the article "Companies reduced investment in the quarter and drew down on their inventories rather than increase production"

-->  gross domestic product shrank at an annualized rate of 0.8 percent. 

--> China, where growth in Asia’s largest economy is slowing, in some sectors markedly because Japan has been cutting down on their supplies of industrial equipment, construction machinery and other capital goods to China.

this is due to the reduction of demand in China for Japan goods.

-->work force is shrinking

this is because

-->  it has struggled in lifting incomes, spending and investment.

--> claimed that “The gentle recovery in the economy is continuing.”

The latest bout of weakness could add to pressure on the central bank to expand its stimulus efforts.

Its stimulus efforts include injecting trillions of yen into financial markets each month by buying up government debt.

The idea is to keep borrowing costs low and encourage households and business to spend.

ABOVE IS THE GRAPH ON THE INFLATION RATE OVER THE PAST FEW MONTHS IN 2015.

*THEY ATTAINED 0% INFLATION IN SEPTEMBER

-->Business spending fell 1.3%,

Japan economy in the 3rd quarter of 2015. It is facing economic growth but it is insufficient as they have debts.

Consumer spending, meanwhile, fell 2.4 percent from the same month a year earlier, and average incomes fell 0.9 percent.

Japan’s inflation rate also was lower in October, with core inflation excluding volatile food prices down 0.1 percent for the third month in a row."

"Japan’s jobless rate fell to a 20-year low in October, but consumer spending and incomes also edged down as the tight labor market failed to spur significant increases in wages."

It was said that Japan’s economy was “out of gear”, with most of Abenomics’ benefits limited to the country’s boardrooms.

“That’s why consumption is still weak, even though employment got better,” Osanai added.

"The second straight rise in industrial production indicates that the economy returned to growth this quarter.....and it signalled Japan's second recession in as many years would likely be short lived."

The pickup was largely driven by demand for semiconductor chips and other electronic devices that Japan ships abroad,

"Industrial production as a whole is gradually bottoming out,

"The weak figures came despite signs of a tight labour market, with the headline unemployment rate at a two-decade low of 3.1 per cent. However, the relatively upbeat factory output data published missed market expectations for a 1.8 per cent rise and Japan's industry ministry was cautious about the pickup."

Japan core inflation falls first time in over two years

"Core consumer prices in the world's third largest economy, Japan, fell on an annual basis for the first time in over two years in August."

"Even with this aggressive pace of asset buying, it is still nowhere near its 2% inflation target,"

Japan Consumer Price Index (CPI) over the past few months in 2015.

when a country has idle resources, the government can use monetary and/or fiscal policy to stimulate the economy, putting those workers into those offices then there will be inflation.

however in japan, there is a very low unemployment rate, and the economy is expanding at or above its long-team potential growth rate of around 0.5% to 1%. japan is doing well in many areas yet they still want to have an inflation.

this is because inflation reduces the burden of debt. japan's enormous government debt represents the government's promise to transfer resources from young working people to old people who own bonds. since japan is an aging society, there are more old people than young people.

with sustained higher inflation, it will represent as a net transfer of resources from the old to the young. that would increase optimism and hopefully raise the fertility rate, helping with demographic stabilization.

japan uses loose monetary policy but it does not help much. japan has engaged in an asset-buying program of quantitative easing, although inflation has accelerated, Japanese core inflation has not reach the 2% target and it is drifting lower again.

this can be because of the slowdown in china, which is probably hurting the demand for Japanese products and services. 

it can also be due to the low interest rates that causes the low inflation. using Neo-Fisherism theory, Japan should actually raise interest rates if ti wants inflation. from what we learn from the module MAEC, in order to increase inflation rate, there are 2 ways to do it. cost push and demand pull. by increase interest rates, it will be a cost push, as interest is part of the cost of many companies.

however in another way of looking at it, if interest rate increase, people are less willing to borrow money and spend, causing the aggregate demand to decrease.

Japan’s jobless rate fell to a 20-year low in October. This causes more overtime employees and more temporary workers. Employers do not want to in minimum wages as it would be difficult to reverse if the economy takes a turn for the worse.

The unemployment rate decrease from september 3.4% to October 3.1% and it is the lowest employment rate in Japan for the past 20 years.

The "Abenomics" policies will only work if consumers and companies spend more. Abe has also launched social welfare initiatives aimed at easing the burden of child care and elder care to help encourage more women to work.

The government also intends to raise the minimum wage, which is now at a modest 798 yen ($6.50/£4.30) an hour on average, by 3% a year, aiming to get it up to 1,000 yen ($8.15) an hour by 2020.

Even the senior UN official called on Tokyo to accept more refugees.

Last year, Japan received 5,000 applicants but only 11 people were accepted

The country is meanwhile facing a declining population and an ageing population.

Reason being retirees left the workforce.