The Strategist

Japanese GDP slows to minimum in Q3


11/14/2019 - 10:07



The trade war has had a negative impact on the Japanese economy. Against this background, Tokyo may increase budgetary investments in the economy.



Sonny Abesamis
Sonny Abesamis
Japan's GDP in the III quarter grew at the slowest pace for the year, as the trade war between the US and China and weak global demand led to a reduction in exports. This may force politicians to increase fiscal and monetary stimulus in order to support the fragile economic recovery.

Private consumption growth also slowed down compared to the previous quarter. This casts doubt on the Bank of Japan's view that high domestic demand offset the impact of increased global risks.

According to preliminary data published by the Japanese government, the third largest economy in the world grew in the III quarter on an annualized basis by only 0.2%, slowing sharply after a revised growth of 1.8% in April-June.

The result is significantly behind the median market growth forecast of 0.8%. This is the weakest growth after a decrease of 2% in July-September last year.

Based on these indicators, lawmakers may increase pressure on the government, seeking to increase budget expenditures to support the economy. However, many experts believe that this will exacerbate the effects of the increase in sales tax, which began to operate in October.

According to the government’s report, private consumption grew by 0.4% in July-September, while in the previous quarter it grew by 0.6%. Capital expenditures rose 0.9%, accelerating over the previous three months. External demand decreased by 0.2 percentage points, while domestic demand increased by 0.2 percentage points.

According to the Japanese cabinet, annual growth surpassed quarterly growth by 0.1%, which is less than the average growth forecast by 0.2%.

source: japantimes.co.jp




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