Japan Q3 GDP falls faster the initial estimates
A man walks past a sign of Bank of Japan outside its headquarters in Tokyo, Japan, Oct 31, 2023. REUTERS/Kim Kyung-Hoon/File photo
TOKYO – Japan’s economy fell faster than initially estimated in the third quarter, revised data showed on Friday, complicating the central bank’s efforts to phase out its accommodative monetary policy.
Consumer and business spending both shrank, driving down third-quarter gross domestic product (GDP). Separate data showed real wages and household spending kept falling in October, as prolonged inflation discouraged shoppers.
The economy lost an annualized 2.9 percent in July-September, the revised Cabinet Office data showed, more than a previously estimated 2.1 percent contraction and market forecasts for a revised 2 percent decline.
Capital expenditure fell 0.4 percent, which compared with a preliminary 0.6 percent decease and a median market forecast for a 0.5- percent fall.
Private consumption, which makes up more than half of the economy, fell 0.2 percent in July-September, versus a mostly flat change in the initial estimate.
External demand shaved 0.1 percentage point off real GDP, compared with the preliminary reading of 0.1 point, as service imports outgrew auto exports.
Separate data showed inflation-adjusted real wages dropped 2.3 percent year-on-year in October to mark a 19th straight month of decline, although slower than the 2.9 percent fall in September, according to the labor ministry.
Although nominal salaries rose 1.5 percent, inflation of more than 3 percent wiped off the wage growth in real terms, a gauge of consumers’ purchasing power. With income stagnant, household spending decreased 2.5 percent in October from a year earlier, falling for eight months in a row, an internal affairs ministry data showed.
The Bank of Japan has stressed it needs to maintain ultra-low interest rates until sustainable inflation of 2 percent along with wage hikes comes into view. Next year’s wage outlook would be crucial for determining whether prices were on the right track, governor Kazuo Ueda said on Thursday.
