Japan registers less demand from overseas
Japan’s growth rate halved during the July to September period, compared with the first six months of the ongoing year, mostly because of a falling demand from emerging markets as well as weaker domestic consumption
Japan’s GDP expanded at an annualised pace of 1.9 % in the three months ending September 30, 2013. The result was a sharp slowdown from the 4.3 % expansion during January – March quarter and the 3.8 % rise in the April – June period. Policy makers stress the slowdown is expected to be temporary, noting that the expansion marks the first four straight quarters of growth since 2010. The growth was boosted by booming exports and vibrant consumer spending, but these two pillars lost momentum in the third quarter, as exports fell on an annualised basis to 2.4 %, while personal consumption increased only a meagre 0.3 %. In the quarter April to June exports were up 12.2 % and domestic consumption 2.3 %. Thus it becomes more difficult to boost consumer expenditure through stock prices. The issue to create consumption growth through employment and wage increases will be the critical focal point in the last quarter and beyond.
In the third quarter, government funded public works helped to push up the third quarter growth. Public works spending soared to an annualised 28.7 % in the third against the second quarter, thanks to the government’s JPY k10.3 billion (around USD 103 billion) stimulus package earlier this year.
Corporate capital expenditure is on a weak recovery road with an increase of 0.7 %. Inventories turned around to build-up from a rundown, contributing to growth for the first time in four quarters.
Investment in housing was strong, amid Japan’s ultralow interest rates and rush demand before sales tax is hiked up from 5 % to 8 %.
The GDP deflator fell 0.3 % annualised, compared to a drop of 0.5 % from April to June, the decline was the most insignificant in four years.