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The Japanese economic system has experienced a drop for the first time in six quarters, primarily driven by declining exports as a result of recent American trade duties.

Group of Seven Economic Rankings

Japan has become the initial G7 nation to announce an output shrinkage in the most recent quarter.

With the United States still needing to release its GDP figures for the third quarter, the present Group of Seven economic standings display:

• The French economy: +0.5% quarterly growth
• United Kingdom: +0.1%
• Canada: 0.1 percent (provisional estimate)
• Germany: zero growth
• Italian economy: no growth
• Japan: negative 0.4 percent

Tourism Stocks Slump during Political Rift with China

Alongside the economic contraction, Japan is experiencing an growing diplomatic conflict with China regarding Taiwan.

Shares in Japan's tourism and consumer firms have declined noticeably after China urged its nationals to refrain from visiting to Japan.

This action by Beijing heightened a political dispute that was sparked by statements from Japan's recently appointed prime minister about the possibility of sending troops in the case of a potential Chinese invasion on Taiwan.

The situation caused a surge of sell-offs across Japan's leisure stocks.

• The Tokyo Disneyland operator stock fell by 5.7 percent
• The department store chain tumbled by 11.3 percent
• The national carrier fell by 3.75%

"The ongoing tension over Taiwan and China's travel warning advising against visits to Japan brings near-term headwinds for retail and hospitality sectors.

"Chinese visitors account for roughly 25% of Japan's international visitors, making department stores, luxury retail, and tourism services particularly at risk."

GDP Decline Details

Japanese GDP fell by 0.4 percent in the July-September quarter, as industrial exports were hit by tariffs levied by the United States this year.

Overseas shipments were a primary driver of the contraction, dropping by 1.2% compared with the April-June quarter, and were 4.5% lower than a the same period last year.

Previously, the American government had proposed Japan with a new 25 percent tariff on its products, which was later lowered to 15 percent when the two nations concluded a trade agreement.

Private demand also declined, by 0.3% quarter-on-quarter.

On an annual basis, Japan's GDP shrank by 1.8% in the quarter through September.

"Japan's economy was stable in the initial six months of this year and the latest GDP data showed that momentum is halted for now.

I expect Japan's economy to be returning on a gradual recovery trend going forward."

The White House has lately acknowledged the effect of tariffs on Americans, lowering tariffs on imported food products including beef, tomatoes, coffee and bananas amid growing concerns about increasing costs.

Economic Agenda

• 8am GMT: Swiss GDP report for Q3
• 15:00 Greenwich Mean Time: US construction spending data for August