Japan downgrades Q3 GDP on deeper hit to consumer spending

Japan downgrades Q3 GDP on deeper hit to consumer spending

8/12/2021 3:37:00 AM

Japan downgrades Q3 GDP on deeper hit to consumer spending

TOKYO : Japan's economy shrank slightly faster than initially reported in the third quarter, as a sharp rise in local COVID-19 cases delivered a heavy blow to private consumption and a global chip supply shortage took a toll on corporate sentiment.The deeper contraction is a setback for policymakers hopin

TOKYO : Japan's economy shrank slightly faster than initially reported in the third quarter, as a sharp rise in local COVID-19 cases delivered a heavy blow to private consumption and a global chip supply shortage took a toll on corporate sentiment.

The deeper contraction is a setback for policymakers hoping easing supply shortages and loosened pandemic curbs would support a recovery in the world's third-largest economy this quarter.Japan's economy declined an annualised 3.6per cent in July-September, worse than the preliminary reading of an annualised 3.0per cent contraction, Cabinet Office data showed Wednesday.

The reading, which was also worse than economists' median forecast for a 3.1per cent drop, equals a real quarter-on-quarter contraction of 0.9per cent from the prior quarter, versus a preliminary 0.8per cent drop.The faster decline was mainly due to a larger fall in private consumption, which makes up more than half of gross domestic product and shrank 1.3per cent from the previous three months, worse than the initial estimate of a 1.1per cent drop. headtopics.com

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The data showed public investment dropped 2.0per cent versus the initial estimate of a 1.5per cent decline, while capital spending saw a smaller fall, shrinking 2.3per cent from the prior quarter, compared to 3.8per cent preliminary drop.The net contribution of exports to the GDP change was zero, offset by imports, while domestic demand pulled it down by 0.9 percentage point, matching a preliminary contribution.

The GDP downgrade comes after data on Tuesday showed household spending fell for a third straight month in October, a sign it may take time for consumer spending to recover.Since the start of the pandemic, Japan's government has sought to support the fragile economy by large-scale fiscal spending. It unveiled a record US$490 billion package last month.

(Reporting by Daniel Leussink; Editing by Sam Holmes)

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