TEHRAN, December 10 -The Japanese economy contracted the most in over four years in the third quarter as companies slashed spending, threatening to chill the investment outlook in 2019 as the export-reliant nation grapples with slowing global growth and trade frictions.
TEHRAN, Young Journalists Club (YJC) -The Japanese economy contracted the most in over four years in the third quarter as companies slashed spending, threatening to chill the investment outlook in 2019 as the export-reliant nation grapples with slowing global growth and trade frictions.
The slump in the world’s third-biggest economy adds to signs elsewhere in Asia and Europe of weakening momentum, with recent data in China and Australia showing a slowdown in growth and stoking concerns about the wider impact of the Sino-U.S trade war.
Japan’s gross domestic product shrank at an annualized rate of 2.5 percent in the July-September quarter - the worst downturn since the second quarter of 2014 - from 2.8 percent growth in the second quarter, revised data from the Cabinet Office showed.
The slide, in part driven by a series of natural disasters that forced factories to cut production, was deeper than an initial estimate of a 1.2 percent contraction and against economists’ median forecast for a 1.9 percent decline.
The capital expenditure component of GDP fell a sharp 2.8 percent from the second quarter, worse than the expected 1.6 percent decline and the preliminary reading of a 0.2 percent drop.
That was the biggest decrease since the third quarter of 2009, as wholesalers, retailers, and information and communications machinery cut spending, the Cabinet Office data showed.
“Capex is decelerating in areas such as all-purpose machinery, production equipment and automobiles,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Depending on extent of global slowdown and trade frictions, companies may put off their bullish spending plans or even make adjustments from the latter half of this fiscal year onwards.”
That risk - of businesses cutting back on spending - is a worry for policymakers who are counting on capital expenditure to boost growth and inflation. Capex has been a bright spot in the economy since late 2016, underpinned by investment in automation and labor-saving technology to cope with labor shortages.
Source: Reuters
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