In the third quarter of 2014 the Japanese economy lost 1.8 percent of its GDP. This exceeds the growth of 1.5 percent in Q1 of 2014. In other words, for the first half of 2014, on a net basis the overall Japanese economy lost  about half a percent of its annual GDP.

Some commentators have blamed the decline on specific public policy measures,  such  as a large increase in the national sales tax in April, which was implemented to cope with Tokyo’s staggering fiscal deficit and public sector debt. However, it seems more likely that the tax increase sparked the growth in GDP in Q1 as shoppers sought to beat the tax increase, rather than depressing consumer demand in Q2.

On balance, the worse than expected Japanese economic data confirms that Japan remains mired in economic stagnation, despite a multiplicity of stimulus measures enacted by various Japanese governments, and most recently by current Prime Minister  Shinzo Abe, in addition to loose monetary policies adopted by the Bank of Japan. In the meantime, tensions are rising between Japan and its major trading partner, China. That will only worsen the plight of  the Japanese economy.

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Japan’s economy is in very deep crisis. The latest figures, reflecting economic performance from the April-June period, reveal official growth at a mere 0.1 percent, according to Japan’s Cabinet Office. This is far worse than even the miserable 0.6 percent that had been forecasted by economists.

The Q2 figures show that Japan is effectively back in an L shaped recession, plagued by domestic price deflation, shrinking internal demand despite massive debt-financed stimulus spending by the government, coupled to an export-killing appreciation in the value of the yen. In sum total, the world’s 2nd or 3rd largest economy (depending on how much trust one has in official Chinese government GDP statistics) is in a terrible state. And that is without even factoring in the growing probability that Tokyo will face a severe sovereign fiscal crisis. That is no mere conjecture; Japan’s prime minister has already warned that his country could face a public debt catastrophe as severe as in Greece.

If Japan is in dire economic straits, it is clear that the global economic crisis  is far from ending.

Japan’s Finance Ministry has released trade figures for August, and is spinning a massive contraction in exports as “good” news. Well, perhaps Tokyo believes the latest data is evidence of good news, as imports declined even more, creating a modest trade surplus. However, the reality both figures present is that global trade remains weak, hardly an auspicious indicator of an end to the global economic crisis.

In August, Japan’s exports declined by 36% from August of 2008. Looking at the export figures in detail, shipments to the United States declined by 34.4%; to China by 27.6% and to the European Union by 45.9%. In spite of the clear collapse of Japan’s export machine, Tokyo still reported GDP growth in the last quarter, evidence that the recession has ended in Japan, or so the Finance Ministry would lead one to believe. However, those GDP growth figures only exist due to massive pump-priming by the government, which presides over the largest sovereign debt in the world, measured as a proportion of GDP.

In other negative signs that Japan’s economy remains moribund, the nation’s largest  air carrier, Japan Airlines, in on the verge of bankruptcy. JAL is on its knees, appealing to the new government in Tokyo to provide a bailout. It will be interesting to see if the new political power center in Tokyo will abide by its campaign promise to restrict corporate welfare in exchange for more public welfare, or cave in to the prospect of a major corporate failure.

Official figures just released reveal that Japan’s unemployment rate has increased to 5.7%, its highest level since the end of the Second World War. To put this number in perspective, the number of Japanese workers unemployed is more than one million higher than one year ago. In addition, consumer prices continue to fall, continuing Japan’s dangerous deflationary spiral. Deflation is particularly feared in Japan, as this destructive economic force was responsible for the prolonged L shaped Japanese recession of the 1990s.

The horrible economic news will undoubtedly be the kiss of death for the ruling Liberal Democratic Party, expected to go down to a humiliating landslide defeat in this weekend’s general election in Japan. However, it is doubtful if even a political transformation in Tokyo will bring quick relief to the Japanese economic crisis.