The Bank of Japan’s “tankan” survey showed that Japanese manufacturers’ business mood worsened in Q3 as the weakening yen and its inflationary impact on business costs undermined a fragile economic recovery. Fears of a global economic slowdown cloud the outlook for the export-reliant economy. The survey also showed that service sector sentiment brightened a little from three months ago although retailers were less optimistic due to the rising cost of living blamed on higher commodity prices and the boost to import prices from the yen’s declines. Japan’s economy expanded an annualized 3.5% in Q2. Analysts expect growth to have slowed in the third quarter, as slowing global demand and rising raw material prices weigh on exports and consumption.
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