July 22, 2024

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The Japanese economy contracted much more than expected in the third quarter

The Japanese economy contracted much more than expected in the third quarter

View of Mount Fuji and Tokyo skyline at dusk.

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The Japanese economy contracted more than expected in the July-September period, Temporary government data Data showed on Wednesday, amid slowing global demand and rising domestic inflation.

Provisional GDP fell 2.1% in the third quarter from a year ago, after expanding 4.8% in the April-June period. This represents a larger contraction than the 0.6% decline expected in a Reuters poll.

The third largest economy in the world also contracted by 0.5% in the third quarter compared to the previous quarter, after expanding by 1.2% in the second quarter from the first quarter. This was also a larger contraction than expectations of a 0.1% contraction.

The decline was Japan’s first in four quarters, part of an unstable trend since the start of the COVID-19 pandemic in early 2020 that has seen periods of economic expansion alternating with contraction.

It highlights the complex challenges facing the Bank of Japan as Governor Kazuo Ueda considers an eventual exit from its ultra-loose monetary policy, while strengthening the case for the Japanese government’s 13.2 trillion yen ($87 billion) economic package that will include… Subsidies and payments to the Japanese central bank. Low-income families to mitigate high energy and utility bills and aim to reduce the high cost of living.

The GDP weakness was partly driven by weaker-than-expected domestic capital spending, which contracted 0.6% in the third quarter from the second quarter — contrary to expectations for a 0.3% expansion, according to the same government statement.

Private consumption in Japan was flat in the third quarter compared to the previous quarter, as domestic and foreign demand weighed on the economy.

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This is a developing story. Please check back for more updates.