June 26, 2022

The Japan Cabinet Office reported the country’s real gross domestic product in the July-September period to fall by 0.8 percent from the previous quarter, or an annualized 3.0 percent. Such a dip in economy has been attributed to long drawn COVID-19 state of emergency, slow car sales and exports due to global chip and parts shortages.

According to the preliminary data released by the Cabinet Office, the latest GDP figure has been worse than private-sector economists’ average projection of a 0.6 percent annualized contraction.

Summary of the economy –

• The country’s consumer spending fell 1.1 percent, down for the first time in two quarters.
• The same has been attributed to slow expenditures on services such as trips and dining out under the government’s virus emergency, which was fully lifted nationwide on Oct. 1.
• The household spending on vehicles downgraded as automakers were forced to cut output since around the summer.
• Purchases of home appliances were also recorded to be weak.
• The country’s auto production also reduced to 3.8 percent.
• In the reporting quarter, the auto production struggles caused exports to decline 2.1 percent.
• The country’s imports declined 2.7 percent, thus reflecting bad domestic demand and slow imports of car parts, although helping boost GDP to some extent.
• Due to global lumber shortage and related soaring prices for the building material, private housing investment fell 2.6 percent partly.
• In the same period, government spending rose 1.1 percent. This was supported by the nation’s COVID-19 vaccination campaign along with supportive measures.
• Public investment was down 1.5 percent.

According to government data, the summer Tokyo Olympics and Paralympics relatively failed to boost spending by domestic travellers, along with overseas visitors.

However, the Cabinet Office besides the recent fall in economy is hopeful that the country’s GDP will return in 2021 to its “pre-pandemic level,” that is to the size in October-December 2019.

For the 2021 third quarter, the country’s annualized size of real GDP was recorded at 534.71 trillion yen ($4.7 trillion), while that for the fourth quarter in 2019 was 546.96 trillion yen.

The economy in nominal terms contracted 0.6 percent, or an annualized 2.5 percent, in the reporting quarter.