Bord Foren

logo-news

Japan’s economy sinks into contraction as spending, investment decline

TOKYO (AP) — Japan’s economy slipped into a contraction in the third quarter, decreasing at an annual pace of 2.1% as consumption and investments shrank, the government reported Wednesday.

Real gross domestic product, which measures the total value of a nation’s products and services, fell 0.5% in the July-September period for the world’s third largest economy, the Cabinet Office said. That would produce a 2.1% drop if the quarter’s performance continued for a full 12 months.

The downturn came after the economy grew a revised 3.7% in the first quarter and a revised 4.5% in the second quarter on an annualized basis, according to the government figures.

The third quarter’s performance was far worse than what had been expected, according to the financial services company ING, which had forecast an annual contraction of 0.5%.

Other news
FILE - Goldfish and carp swim in a spherical water tank at an art aquarium exhibition in Tokyo on July 12, 2014. In recent years, koi have become hugely popular in Asia, with exports doubling over the past decade. One-fifth of the koi exported from Japan are shipped to China. But Beijing let expire a contract for the required quarantine of the fish, effectively halting the country's import of koi from Japan and further souring the two rivals' relations. (AP Photo/Koji Sasahara, File)Koi emerges as new source of souring relations between Japan and ChinaFILE - A pedestrian carries a phone past a SoftBank logo in Tokyo on May 12, 2022. Japanese technology company SoftBank Group Corp. racked up a huge loss in the July-September quarter as some of its investments soured, the company said Thursday, Nov. 9, 2023. (AP Photo/Shuji Kajiyama, File)Japan’s SoftBank hit with $6.2B quarterly loss as WeWork, other tech investments go sourTomihiro Tanaka, left, President of Family Federation for World Peace and Unification, and its senior member Hideyuki Teshigawara bow at the start of a press conference Tuesday, Nov. 7, 2023, in Tokyo. The church has criticized the Japanese government’s request for a court order to dissolve the group, saying it’s based on groundless accusations and is a serious threat to religious freedom and human rights of its followers. Japan’s Education Ministry last month asked the Tokyo District Court to revoke the legal status of the Unification Church after a ministry investigation concluded the group for decades has systematically manipulated its followers into donating money, sowing fear and harming their families.(AP Photo/Shuji Kajiyama)Unification Church in Japan offers to set aside up to $67 million in a compensation fund

“Most of the miss in the consensus forecast came from weaker-than-expected domestic demand items, such as consumer spending, business investment and inventory accumulation,” Robert Carnell, ING’s head of research for the Asia-Pacific area, said in a report.

Private consumption shrank an annualized 0.2% during the quarter, while corporate investment decreased 2.5%.

Economic activity in the previous two quarters got a boost from recovering exports and inbound tourism. Social restrictions related to the COVID-19 pandemic have gradually eased, allowing for more travel and a fix to the crimped supply chain for production.

READ:   Hezbollah official says his group already ‘is in the heart’ of Israel-Hamas war

Exports managed to eke out 0.5% growth in the latest quarter, in contrast to a 3.2% rise in the second quater. Auto exports have recovered after stalling over the shortage of computer chips and other parts. Also adding to exports was tourism revenue.

Public demand, which includes government spending, rose at an annual pace of 0.6% in the latest quarter.

Given the numbers, Japan’s central bank isn’t likely to consider any move toward higher interest rates.

The Bank of Japan has taken a super-easy monetary policy for years, with zero or below-zero interest rates aimed at energizing an economy long beset by deflation, which reflects the stagnation that has plagued Japan with its aging and shrinking population.

Some analysts said the sharp contraction could be temporary.

Prime Minister Fumio Kishida has pushed a 17 trillion yen ($113 billion) stimulus package, including tax cuts and household subsidies. A supplementary budget for its funding recently won parliamentary approval.

___

Yuri Kageyama is on X, formerly Twitter: https://twitter.com/yurikageyama