Private demand, exports dwindling as shrinking economy of Japan struggles
ALBAWABA – Germany’s also-faltering economy is set to overtake the shrinking economy of Japan as the third-largest in the world, with official data released Wednesday showing Japanese exports falling and the overall economy shrinking between June and September.
Japan's economy has gone into reverse, adding to the struggles of Prime Minister Fumio Kishida.
The shrinking economy of Japan is the world’s third-largest, but it has shrunk 0.5 percent in the months between June and September, compared to the second quarter, Agence France-Presse (AFP) reported.
Analysts expected a 0.1 percent contraction, but with exports growing at a much slower pace and private demand sliding, the shrinking economy of Japan has fallen beyond expectations.
According to AFP, this contraction followed two straight months of growth, despite low consumer spending and weakness in the global economy weighing on Japan’s exports.
Imports rose by 1 percent, further dragging on growth, while exports grew by 0.5 percent, down from 3.9 percent in the previous quarter, as reported by AFP.
Meanwhile, private demand, including private residential and corporate investment, fell 0.6 percent.
The economy of Japan is struggling with exports dwindling and the Yen being one of the worst performing currencies in the world - Shutterstock
Overall, the shrinking economy of Japan contracted by 2.1 percent compared to the same quarter last year, missing market expectations of minus 0.4 percent, Bloomberg News reported.
Economy of Japan: Contraction outweighed stimuli
As a result, Kishida's poll ratings have hit their lowest levels since he took office two years ago, as consumers reel from rising prices.
The prime minister announced this month a stimulus package worth $113.2 billion, aimed at boosting the economy and easing the pain of inflation.
So far, the government has already injected hundreds of billions of dollars into the economy over the past three years in response to the Covid-19 pandemic.
The latest plan involves income and residential tax reductions of around $265.5 (40,000 yen) per person, and $464.7 (70,000 yen) cash handouts to low-income households.
Japan was for decades beset by deflation but, like other economies around the world, prices have risen since the Ukraine war began in February 2022.
A weaker yen, while welcome news to Japanese exporters, has made imports pricier and stoked inflation for households.
Unlike other major central banks, the Bank of Japan has kept interest rates below zero and bond yields ultra-low in a bid to boost economic growth. That has come even as inflation persists, while the Bank of Japan's stance has added to pressure on the yen, one of the worst-performing major currencies in 2023.
