Economy declines by annualized 1.2％ in Jul-Sept.

The Yomiuri Shimbun

14:53 JST, November 15, 2022

Japan’s gross domestic product in July-September declined 0.3% from the previous quarter in price-adjusted real terms, according to a preliminary report released by the Cabinet Office Tuesday.

The GDP fell 1.2% on an annualized basis, marking the first decline in four quarters.

The negative growth was mainly due to a 5.2% increase in imports from the previous quarter. Exports also increased by 1.9%, but the net result pulled GDP down 0.7 percentage points.

The growth was attributed to coal and oil import costs, as well as a concentration of payments from domestic companies to overseas advertising affiliates that handle such services as online advertising. The Cabinet Office said it was a temporary factor.

Private consumption, which accounts for more than half of GDP, rose 0.3%, marking the fourth consecutive quarterly increase. However, the figure was significantly lower than the 1.2% increase logged in the April-June period.

Eateries and other such establishments in the hospitality sector did relatively brisk trade during the summer holidays when there were no COVID-19 restrictions, but the arrival of the seventh wave of the pandemic impacted businesses.

The preliminary report indicates the recovery in economic activity from the pandemic has picked up, spurring investments in digitization and decarbonization, in addition to upgrades to production facilities that had previously been postponed.

Business investment in plant and equipment rose 1.5%, marking the second consecutive quarterly increase.

However, housing investment fell 0.4%, marking the fifth consecutive quarterly decline.

Nominal GDP, which closely reflects household sentiment, fell for the first time in four quarters, down 0.5% with an annualized decline of 2%.

“A temporary increase in payments for services overseas contributed negatively, but the report still shows that the economy is recovering moderately,” Shigeyuki Goto, the economic revitalization minister, said in a statement.

The annualized real GDP stood at ¥543.6 trillion, surpassing the pre-pandemic level of ¥540.7 trillion in the October-December period in 2019 for the second consecutive quarter.