Japan’s growth slowed in the third quarter after a major earthquake warning, official data showed on Friday, as Prime Minister Shigeru Ishiba tries to jump-start the world’s fourth-largest economy.
A “megaquake” alert in August and one of the worst typhoons in decades resulted in gross domestic product (GDP) growing just 0.2 percent between July and September compared to the previous quarter, according to preliminary government data.
The data is in line with market expectations, but indicates a slowdown from a revised 0.5 percent over the past three months.
On an annual basis, gross domestic product expanded 0.9 percent, much slower than the revised 2.2 percent growth in April-June.
Chief Cabinet Secretary Yoshimasa Hayashi said Friday the government is hoping for a “gradual improvement” of an economy that has suffered decades of stagnation and harmful deflation.
“Our country is at a critical crossroads as it is about to transition to a growth-based economy driven by wage growth and investment,” he said at a regular briefing.
“To realize this, we will implement all possible economic and fiscal policies, including the package currently under consideration.”
Ishiba retained his post in parliamentary voting on Monday despite leading the ruling coalition to its worst general election result in 15 years last month.
The 67-year-old has unveiled plans for the government to support the AI ​​and semiconductor sectors with more than 10 trillion yen ($64 billion) by 2030.
He also hopes to win over opposition parties to pass a draft supplementary budget for a new stimulus package this month – which will reportedly include cash distributions for low-income households and families.
Analysts said higher spending on cars, resumption of production after domestic testing scam-related disruption helped boost output during the quarter.
Wage increases and temporary income tax cuts were also positive factors.
But that was tempered by Typhoon Shanshan and the “megaquake” alert, which the weather agency first issued under a new warning system in August and later lifted.
It prompted consumers to stock up on emergency supplies, leading to rice shortages in supermarkets, while thousands of people canceled hotel bookings during Japan’s biggest holiday period.
When Typhoon Shanshan struck that same month, factory production was also affected, leading to the cancellation of trains and flights.
Moody’s Analytics economist Stephen Angrich called the challenges facing Japan “substantial”, predicting a “volatile” time for global trade, especially with the return of Donald Trump as US President.
“Wage growth is improving, but not yet strong enough to keep pace with inflation, which will strain domestic finances. Weak external demand and domestic production issues will weigh on exports,” Angrik said.
He said a further decline in the yen against the dollar could prompt the Bank of Japan to raise interest rates before the end of the year despite the poor data performance.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
