TOKYO, Dec. 8 (BNA): Japan’s economy, the world’s third-largest, contracted less than initially expected in the third quarter, reinforcing the view that it is slowly recovering from a COVID-19 recession even as major export markets show more signs. on weakening.
Separate data showed that the economy posted its first current account deficit in eight years in October, reflecting higher import costs imposed on households and businesses due to the yen’s drop in value to multi-decade lows this year, according to Reuters.
The revised quarterly contraction of 0.8% in gross domestic product released by the Cabinet Office compared to the median forecast of economists for an annual decline of 1.1% in a Reuters poll and an early official estimate of a contraction of 1.2%.
The revision was driven by an upward change in own inventories and compared with a quarterly gain of 4.5% in the prior quarter.
Some analysts say the economy could rebound in the current quarter due to the easing of supply restrictions on semiconductors and automobiles, and the lifting of COVID-19 border controls, which boost tourism.
Still, others are preparing for the global economy to slip into recession next year, dealing a heavy blow to trade-dependent Asian exporters such as Japan.
“The resumption of domestic tourism and campaigns to promote domestic travel will boost private consumption, and help the economy return to growth in the October-December quarter,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.
“Going forward, the global slowdown caused by rising interest rates in advanced economies and the decline in real estate in China will affect the Japanese economy, which may cause a technical recession or contraction in two consecutive quarters in the first half of next year.”
Before the annualized conversion, GDP for the third quarter fell 0.2% sequentially, compared to an initial contraction estimate of 0.3%. Analysts had expected a similar decline to the previous reading.
Among the key sectors, private consumption, which makes up more than half of Japan’s GDP, helped drive growth, although revised downwards. Capital expenditures and exports were the other major contributors to growth.
However, a weaker yen and exorbitant import bills, which increase the cost of living, have offset contributors to GDP growth.
Finance Ministry data showed that rising costs of energy and other imports brought Japan to a seasonally adjusted current account deficit of 609.3 billion yen ($4.45 billion) in October. This was the first deficit since March 2014.
Before seasonally adjusted, the current account deficit in October was 64.1 billion yen, the first deficit since January.
The Bank of Japan’s latest Tankan report showed that the mood for manufacturers worsened in the three months ending in September, as stubbornly rising materials costs weighed on the outlook for the fragile economy.
Manufacturers’ expectations for a further recovery remained unchanged, while service-sector companies saw conditions deteriorate, according to a monthly survey conducted by Reuters on Wednesday.
FAE