Japan is poised to enter its first recession in six years as its economic growth suffers due to falling exports and reduced consumer spending.

In keeping with the trend of a global economic slowdown, the Cabinet Office of Japan revealed that the country’s second quarter GDP showed a fall of 2.4 percent as opposed to a gain of 3.2 percent in the preceding quarter. The Nikkei 225 Stock Exchange too lost the greatest number of points in a month.

Analysts say that exports, which had driven most of Japan’s post-war economic boom, are now lowest since 2001-2002. Exports came down in the last quarter by 2.3 percent, its biggest fall in three years. Rising food prices and soaring fuel costs have meant that consumers are also spending less. According to the reports released by the Cabinet Office, consumer spending fell by 0.5 percent from the last quarter.

The impact of falling demand has hit Japan’s manufacturing sector hard. Last week, Toyota Motor Corp announced that its earnings had declined the most in the past five years because of reduced demand in the US. At the same time, Japan Airlines Corp reported that it would go for pay cuts in order to offset increased costs. Even foreign markets, such as Europe and Asia have reported lower demand for Japanese products.

-Kalyani Mookherji