Econintersect: Japan has reported an annual rate of decline of 3.5% for GDP in the third quarter of 2012. The weakening of demand for Japanese exports and weak consumer spending a home were the primary causes of the contraction. The decline is not a surprise – the median for estimates was for a decline of 3.4%, according to Reuters.
It is now widely believed that Japan may be entering another recession. The first two quarters of the year had seen GDP boosted by government subsidies for the purchase of fuel efficient cars and for reconstruction spending following the destruction wrought by the mega quake and tsunami in March of 2011. Both of those sources of growth were missing in the third quarter.
Some commentary from Bloomberg:
“September’s data showed no mercy,” Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo, said before the report. “There’s little doubt that Japan is in recession.”
A global slowdown and a flare-up of anti-Japanese sentiment in China dragged down exports and production in September. With slumping corporate profits also threatening to damp investment, pressure may remain on the Bank of Japan to expand monetary easing and on Prime Minister Yoshihiko Noda to consider a supplementary budget.
- Japan third-quarter GDP shrinks 0.9 pct q/q (Reuters, 12 November 2012)
- Japanese Economy Contracts at Fastest Pace Since Earthquake (Keiko Ujikane and Masahiro Hidaka, Bloomberg, 11 November 2012)