Japanese economy shrank 0.4 percent from July to September, after a 1.9 percent contraction in the previous quarter. Rise in public demand and net exports were not enough to offset a decline in private demand.
Private demand declined 0.9 percent subtracting 0.7 percentage point from the growth. Private consumption, which accounts for about 60 percent of the economy, rose only 0.4 percent, a sign that an increase in Japan's sales tax to 8 percent from 5 percent in April continued to take a toll. Housing investment decreased 6.1 percent while capital spending dropped 0.2 percent. The negative contribution from private inventory was also another major factor in GDP decline.
Public demand increased 0.7 percent and added 0.2 percent to the growth. Government consumption and public investment grew 0.3 and 2.2 percent respectively.
External demand added 0.1 percentage point to the growth as gains in exports (+1.3 percent) were higher than in imports (+0.8 percent).
The third quarter gross domestic product figure translated into an annualised contraction of 1.9 percent.
Today's weaker than expected numbers are likely to force Prime Minister Shinzo Abe to rule out a promised consumption tax rise and call Lower House elections two years ahead of schedule.
11/17/2014 12:35:47 AM