Japan’s economy contracts on lower consumption and exports



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Yuri Kageyama, The Associated Press

Posted Sunday, November 14, 2021 at 8:28 PM EST

TOKYO (AP) – Japan’s economy contracted at an annual rate of 3% in the July-September quarter, as private consumption and auto production suffered from efforts to curb the coronavirus pandemic.

Japan’s gross domestic product, which measures the value of a country’s products and services, fell 0.8 percent from the previous quarter, the Cabinet Office said on Monday.

The annualized rate is the growth or contraction of the economy if the one-quarter rate had been held for a year.

The world’s third-largest economy grew 0.4% in April-June and fell 1.1% in January-March.

Japan has never had a coronavirus lockdown. But he has periodically asked businesses to shut down or limit hours in the event of a “state of emergency.” It also encouraged social distancing.

This crippled consumption and private investment. Private consumption fell 1.1% in July-September from the previous quarter, data showed Monday.

A shortage of computer chips and other parts needed for vehicle production has been a serious problem for months due to lockdowns in Asian countries that produce them.

The production and sales of Japanese automakers suffered. But once the situation in Southeast Asia subsides, production is expected to rebound in the coming months. Toyota Motor Corp., Japan’s largest automaker, recently said production is expected to return to normal next month.

Preliminary and seasonally adjusted real GDP data also showed that exports fell 2.1% in the July-September period from the previous quarter.

The government has tried to reduce infections while keeping the economy running.

Newly elected Prime Minister Fumio Kishida has pledged to expand hospital capacity for coronavirus patients and provide financial aid. His predecessor has fallen out of favor with the public over a widespread perception that his government is not doing enough to tackle the virus.

About 76% of the Japanese population is fully vaccinated, but concerns are growing about a possible new wave of infections. Japan has not announced any concrete plans for the booster injections. Japan has reported around 18,000 deaths linked to COVID-19.

Naoya Oshikubo, senior economist at SuMi TRUST, said an economic recovery will occur once the coronavirus is brought under control. The entertainment industry and restaurants have been hit particularly hard, he said.

“The stars are now aligned for a quick recovery. The state of emergency was lifted at the end of September, resulting in a sharp rebound in consumer spending, with more and more people eating out and going to movies, clubs, the theater and other forms of public entertainment, is ongoing, â€Oshikubo said in a recent report. .

Hopes are also high that Kishida’s government will pass a supplementary budget within the year to support the economy, he said.

Some analysts predict that Japan’s GDP will increase in the October-December quarter.

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