Japan’s GDP Shrinks 0.9% In Q3
By Bhaskar Prasad | November 12, 2012 3:08 PM EST
Japan's gross domestic product contracted in the third quarter compared to that in the previous quarter due to the soft global demand and the weakening domestic consumption in the world's third biggest economy.
According to the data released Monday by the Cabinet Office, Japan’s GDP, which measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy, shrank to 0.9 percent in the quarter ending September 30, down from a 0.1 percent rise in the previous three months.
Subsequent to the end of the purchase incentive policy for environment friendly automobiles, the third quarter witnessed a sharp fall in private consumption. In addition, the data showed that there was a sharp decline in capital expenditure (CAPEX) in the period.
Analysts are of the view that the negative growth will continue into the October-December quarter. “Looking forward, the Japanese economy is surrounded by more negative factors than positive ones with private consumption likely keep adjusting after the waning impact of the policy stimulus, capex likely remaining sluggish due to weak demand both home and abroad, and the level-off in public demand due to declining execution of the counter-disaster stimulus packages, and, last but not least, exports likely staying weak due to the global economic slowdown,” Credit Agricole said in a note.
This report of the economic growth comes after last month the Bank of Japan announced more monetary easing policies with the asset purchase program (APP) by about 11 trillion yen ($138-billion). This brings the total size of the APP to about 91 trillion yen, of which 25 trillion yen is in loans, and the remaining 66 trillion yen is for asset purchases. The policy board agreed a further 5-trillion yen each of Japanese government bonds and treasury bill purchases and announced 0.91 trillion yen of purchases of risk assets.
Meanwhile, the market participants feel that Japan’s economy will need further support, especially with the country’s core consumer prices continuing to fall in September, indicating that deflation persists to impair the economic growth prospects. The data released by Japan’s Statistics Bureau show that the consumer prices declined to 0.1 percent in September from the earlier year, down from 0.3 percent fall in August.
A main reason for the existence of deflation in Japan is due to the shortage of demand relative to the supply capacity of the economy. How the government addresses this will indicate if it can achieve the target of 3 percent nominal GDP growth per annum through 2020 with inflation of 1 percent, which means the economy should achieve a 2 percent annual real growth.
To contact the editor, e-mail:
Most Popular Slideshows
Join the Conversation
- The Pirate Bay Blockade: Cost Of Blocking Websites Like TPB Is Ridiculously High
- Vatican 2014 Final Synod Report: Gays Still ‘Unwelcome’ in Catholic Church, LGBT Thankful for First Step
- New Zealand Losing $9.4 Billion Every Year to Fraud
- 5 Cities With The Highest Cost Of Living In 2014
- Family Of Ebola Nurse Patient Hires Lawyer To Clear Things Up, Refutes CDC Claims; Agency Revises Guidelines
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Chilling: New ISIS Video Addresses Australia; Aussie Teen Delivers Message
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- Xiaomi Mi4 And MiPad Prices Likely Slashed, Thanks To Rivals Oppo, OnePlus And Meizu