Tokyo, 15 November, /AJMEDIA/
Japan’s economy unexpectedly shrank at an annualized real rate of 1.2 percent in the July-September period, marking the first contraction in four quarters, after imports surged and private consumption was sluggish.
Real gross domestic product, or the total value of goods and services produced in a country adjusted for inflation, fell 0.3 percent from the previous quarter, according to the preliminary data released by the Cabinet Office.
The average market forecast in a Kyodo News survey was for real GDP to expand 1.2 percent.
The data bodes ill for the government of Prime Minister Fumio Kishida, which recently drew up an economic package to ease the pain on households from accelerating inflation.
Imports jumped 5.2 percent, faster than exports that grew 1.9 percent.
Domestic demand was relatively firm, supported by the lifting of COVID-19 restrictions that had weighed on economic activity.
Private consumption, accounting for more than half of the economy, increased 0.3 percent as people stepped up spending on dining out and other services.
Capital investment, another key component of domestic demand, grew 1.5 percent as companies sought to boost output capacity and build factories for products such as semiconductors.
Economists expect Japan’s economy to receive a boost from a continued pickup in demand, which was hurt by the COVID-19 restrictions.
A recovery of inbound tourism, which the government is counting on as a visible benefit of the feeble yen that has otherwise led to soaring import costs, is also expected.
Still, uncertainty remains over the outlook, as aggressive monetary tightening by major central banks, including the U.S. Federal Reserve and the European Central Bank, has raised fears of a global economic slowdown.
Growth in China, one of Japan’s major trading partners, is also expected to be hampered by its zero-COVID policy and property woes.
Nominal GDP shrank an annualized 2.0 percent.
