Japan’s economy shrank at a 3 percent annual rate in the July to September quarter, as private consumption and auto production took a hit from efforts to curb the COVID-19 pandemic. GDP declined 0.8 percent from the previous quarter, the Cabinet Office said yesterday.
The world’s third-largest economy grew 0.4 percent quarter-on-quarter in April to June and shrank 1.1 percent in January to March.
Japan never implemented a COVID-19 lockdown, but it periodically asked businesses to close or limit hours under “states of emergency.” It has also encouraged social distancing.
Photo: Bloomberg
That crimped consumption and private investment. Private consumption sank 1.1 percent in July to September from the previous quarter, according to yesterday’s data.
A shortage of computer chips and other parts necessary for vehicle production has been a serious problem for months because of lockdowns in chip-producing nations in Asia.
Japanese automakers’ production and sales have suffered, but once restrictions in Southeast Asian countries ease, production is expected to rebound in the months ahead. Toyota Motor Corp, Japan’s largest automaker, said that production is likely to return to normal next month.
The preliminary and seasonally adjusted real GDP data also showed that exports sank 2.1 percent in the July to September period from the previous quarter.
Sumitomo Mitsui Trust Asset Management Co senior economist Naoya Oshikubo said that economic recovery would come once COVID-19 is brought under control.
“The stars are now aligned for a rapid recovery. The state of emergency was lifted at the end of September, so a sharp rebound in consumer spending, with more people eating out and going to cinemas, clubs, theater and other forms of public entertainment, is underway,” Oshikubo said in a report.
Hopes are also high that Japanese Prime Minister Fumio Kishida’s government can pass a supplementary budget within the year to prop up the economy, he said.
Some analysts forecast Japan’s GDP growing in the October to December quarter.
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