Japan's economy shrinks 2.5 pct in Q3

Published 10.12.2018 07:48
Updated 10.12.2018 07:49
A worker sprays water next to heavy machineries at a construction site in Tokyo. (AP Photo)
A worker sprays water next to heavy machineries at a construction site in Tokyo. (AP Photo)

Japan's economy shrank at an annualized rate of 2.5 percent in July-September, a worse contraction than preliminary data indicated last month, the government said Monday.

The earlier data put the contraction at 1.2 percent, as consumer spending, investment and exports fell.

The revised data from the Cabinet Office shows the seasonally adjusted gross domestic product — the total value of a nation's goods and services — dipped 0.6 percent in the third quarter from the previous quarter.

The data showed private demand and investment fell at a deeper pace than the initial estimate.

Japan's economy, the world's third largest, grew in April-June, but contracted the quarter before that. That contraction ended the longest straight period of expansion for Japan in nearly three decades.

Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo, said the new data requires a revision of assessments about economic growth and investment.

"But the overall trend of economic growth continues," he said in a report, noting that recent natural disasters had crimped growth.

Natural disasters weighed on consumer travel and spending, which means growth could recover if such events don't occur during the year's final quarter.

The closure of a major airport in the western Kansai area after a typhoon was one of the natural disasters that brought down growth. A major earthquake also hit the northernmost island of Hokkaido during the quarter, causing deadly landslides and widespread blackouts.

Until recently, Japan had been experiencing moderate growth under Prime Minister Shinzo Abe's "Abenomics" policies based on a deflation-fighting stimulus program of cheap lending. The nation's continuing labor shortage and slow wage growth are also hurting growth.

Abe's attempts to help women join the workforce are showing only gradual results. Parliament passed a law over the weekend allowing more immigrant workers into Japan starting in April.

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