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Japan has slipped back into recession. Financial analysts are thinking about how this will affect the global economy. Japan's economy unexpectedly shrank for the second quarter in a row, meaning it is officially in recession. The slide in the last quarter took economists by surprise. Figures showed that Japan's economy would grow by 2.1% in the last quarter. Instead, gross domestic product (GDP) fell by 1.6%. Many economists say the fall is because of April's increase in sales tax from five to eight per cent. Japanese consumers have to budget more and are simply not spending.
World leaders are worried the Japanese recession could be bad for the global economy. British leader David Cameron said the world was on the brink of a second economic disaster. He said he saw "red warning lights" for the global economy because of "instability and uncertainty". Mr Cameron said the problems were "plain to see". He added: "The Eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices." He added that emerging markets were slowing down and this was hurting growth.
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