Japan's GDP falls 2.1% in July-Sept., 1st contraction in 3 quarters
Ideas:
Annualized projections are what might happen if the same amount of activity was for the entire year. It doesn't mean that it is going to be the final result, as an economy is very complex and there are quarters of good growth and periods of not so good growth.
But at the same time, as inflation continues in Japan, private consumption of consumer spending it taking a hit meaning consumers might be cutting back on how much they spend.
Weak capital investment might be related to companies feeling not so good about the Japanese economy and maybe are waiting for better situations in the Japanese economy.
Whether 0.42 or 0.5 is not that big a difference when you consider the margin of error in statistical projections. Even so, 0.5 percent is not that big of a decrease in GDP.
Private consumption or consumer spending or household spending, however you want to describe it at a decrease of 0.4 percent, again, is not that much of problem, as there could be more reasons than just increased or continued inflation of the decrease.
For example the summer and early fall had record high temperatures in Japan. So maybe consumers waited to buy late fall or winter clothing. At the same time, because of the record heat in Japan, maybe some households or consumers didn't travel or do things as much outside.
Business investment is always a mixed bag of reasons for or against spending either in Japan or globally. It always seasonal or quarterly as business all don't spend exactly the same week or each month or each quarter.
Consumer spending " lacking dynamism" is a constant part of the Japanese economy as consumer spending, while 50% of GPD, just doesn't reach the level needed for significant economic growth.
Japanese exports are a key economic driver in Japan, as a key driver has a significant affect on economic growth.
Of course the weak Japanese yen has increased profits as a weak currency helps Japanese exporters get more profits for their sales, such as in the US or the EU.
The Chinese situation is an on going situation, as the Chinese ban on Japanese seafood seems to be partly politically motivated. As for example there are still many Chinese tourists to go to Japan and they each a lot of Japanese seafood such sushi.
Its quite possible there was just a lull in tourists coming to Japan in the late summer or early fall because of the record high temperatures in Japan and the high of airline ticket prices have continued.
Imports actually reduce the Japan current account while exports increase the current account. Imports have to be paid for to overseas companies or wholesalers and so on.
Japan is very much a resource poor country and because of that the weak yen, makes imports more expensive in Japan, which affect GDP growth.
Government spending was only 0.3 percent, as usually the Japanese government is a big spending government related to many things.
At the same time, as Japan is more and more an ageing society, medical care costs might continue to increase in Japan.
"Remaining on a mild recovery path, although far from being strong," is a not really a bad sign as a mild recovery is still better than nothing, but of course stronger growth is what is needed to get the Japanese economy out of its stagnation phase.
Private consumption or consumer spending has always been the weak spot in the Japanese economy. Beside inflation continuing there is also the idea that Japanese wage earners, for the most part, have not reached significant wage increases for many years, if not decades.
The there is the idea that Japan is an ageing society, and the older groups usually don't spend as much as the younger groups. But something else might be happening, and this is global too, as the current group of young wage earners are actually worse off than their parents, and just don't have the income or extra income at their parent did at the same age.
The minimum wage situation meant to help part-time or contract workers actually might make the situation worse. As maybe some companies can't afford the extra payments to workers, such as many service type companies that rely on paying minimum wage or not much more than that.
For example, as in South Korea, many companies reduced hours of part-time workers, or laid-off part time staff as their profit margins couldn't handle the extra pay required by the South Korean government.
Again annualized GPD or growth is just a projection for what might happen if they same situation existed for a year. But rarely do the exact situation exists for a entire year and an economy is very complex and many things can happen during the year.
Have nice day and be safe!
