Japan’s GDP shrinks 0.1% in the July-September quarter

November 18, 2008
By Ken Worsley

After a 0.9% quarterly drop in the April-June quarter, Japan’s GDP fell 0.1% in the third quarter, according to data released by the Cabinet Office. The forecasted 0.1% rise reported by Kyodo News before the announcement seems to have been just a bit too optimistic about the state of Japan’s economy.

Consumer spending was reported to have been up 0.3% in the July-September quarter, while capital spending sagged -1.7%. Exports continued to show a slower pace of growth at 0.7%, while imports grew 1.9%. In nominal terms, GDP fell 0.5%, or 2.1% annualized.

Now that two consecutive quarters of falling GDP have been registered, the media is free to say that Japan is officially in a recession, though many observers have been saying so for some time now. Thus, the big question must now focus on how long recessionary conditions will continue. We know that the consumer confidence index and economic sentiment amongst small businesses were both at all-time lows in October.

An article published by CEP today tells us that “some economists say even if Japan’s economy contracts again in the fourth quarter, the downturn might not last long.” On the other hand, Bloomberg quotes Mitsubishi UFJ Securities analyst Takashi Nishimura as saying, “We are going to see a prolonged economic slowdown.”

Expect plenty of debate on this issue in the weeks to come…

Filed Under Business