Japan's economy has shown a decline for the initial time in six quarters, mainly caused by weakening exports as a result of newly imposed American tariffs.
Japan stands as the first Group of Seven country to announce an GDP decline in the most recent three-month period.
As the US yet to publish its GDP data for the third quarter, the present G7 growth rankings display:
Alongside the GDP decline, Japan is dealing with an escalating diplomatic conflict with China concerning Taiwan.
Shares in Japan's tourism and consumer businesses have declined sharply after China advised its residents to refrain from visiting to Japan.
This action by Beijing escalated a political dispute that was initiated by remarks from Japan's recently appointed PM about the possibility of sending troops in the event of a hypothetical Chinese attack on Taiwan.
The development caused a wave of sell-offs across Japan's tourism-related stocks.
"The China-Japan tension over Taiwan and China's advisory advising against travel to Japan creates near-term difficulties for retail and hospitality sectors.
"Tourists from China represent roughly 25% of Japan's international visitors, making department stores, luxury retail, and hospitality particularly at risk."
Japan's gross domestic product declined by 0.4 percent in the third quarter, as industrial overseas shipments were impacted by tariffs levied by the US recently.
Exports were a primary driver of the decline, falling by 1.2 percent compared with the April-June quarter, and were 4.5% lower than a year ago.
Earlier this year, the US administration had proposed Japan with a new 25 percent tariff on its goods, which was later lowered to 15% when the two nations reached a trade agreement.
Private demand also declined, by 0.3 percent compared to the previous quarter.
On an annual basis, Japan's GDP contracted by 1.8 percent in the three months through September.
"The Japanese economic situation was stable in the first half of this year and today's GDP data showed that momentum is halted for now.
I anticipate Japan's economy to be back on a moderate growth trend going forward."
The US administration has lately recognized the impact of tariffs on US consumers, lowering duties on food imports including beef, produce, beverages and bananas amid increasing concerns about rising costs.
