Japan's economy shrank by almost 2 percent in the three months to September amid a decline in exports related to tariffs announced by the United States, persistent inflation and weak investment in the real estate sector, Reuters and Agence France-Presse reported, quoted by BTA.
This is the first contraction of the Japanese economy in six months. The gross domestic product (GDP) of the world's fourth-largest economy fell by 0.4 percent from the previous quarter, according to preliminary data.
Analysts surveyed by Bloomberg had expected an even more significant decline of -0.6 percent. This gloomy picture could increase the likelihood of the adoption of the massive economic support plan promised by the new Prime Minister Sanae Takaichi when she took office last month.
Japan's GDP grew by 0.6 percent in the second quarter (with an upward revision announced today), recorded minimal growth in the first quarter (+0.2 percent) and almost complete stagnation in 2024.
According to government data, the Japanese economy has been undermined in recent months by a weakening of private investment in real estate.
“This is one of the main factors for this decline: a 9.4 percent collapse in residential investment compared to the previous quarter, reflecting the impact of changes to the building code introduced in April that halved the start of new construction projects,“ commented Marcel Thielliant, an analyst at “Capital Economics” (Capital Economics).
In addition, Japan's export-dependent economy continues to be affected by Washington's tariff policies despite a trade agreement reached between the two countries in the summer that fixed US tariffs on Japanese products at 15 percent, down from an initial 25 percent.
Japan's exports to all countries as a whole fell 0.1 percent in August from a year earlier, the fourth consecutive month of decline. They recovered in September, helped by semiconductor exports, but Japan's exports to the US continued to decline (-13.3 percent from a year earlier).
Private consumption, meanwhile, remains almost stagnant amid persistent inflationary pressures. Inflation in Japan accelerated again in September (+2.9 percent year-on-year) after easing in previous months, driven by rising rice and energy prices. The target level set by the country's central bank is 2 percent.
The country, which has been in deflation for a long time, has been facing a steady rise in consumer prices since 2022.
To counter the return of inflation, the Bank of Japan began tightening monetary policy in March 2024 after ten years of extremely expansionary policy, but suspended this trajectory after January this year in view of the emerging economic difficulties.