Japan GDP Shrinks More Than Expected


The Japanese economy contracted 1.8 percent in the April to June period on a quarter-on-quarter basis, according to the second estimate. The new figure comes below a preliminary estimate of a 1.7 percent contraction, as a sales tax hike in April took a heavy toll on household spending while business investment fell more than double the first estimate.

Private consumption, which accounts for about 60 percent of the economy, declined 5.1 percent from 5 percent fall in the earlier estimate. Households reduced their spending after an increase in sales tax to 8 percent from 5 percent in April and many firms in the country were reluctant to allocate more capital spending.

The latest estimate showed private residential investment shrank by 10.4 percent from a 10.3 percent decrease, while business investment fell 5.1 percent from 2.5 percent.

Public demand showed no growth (0.0 percent from a 0.2 percent increase), as the decrease in public investment was unable to offset by fall in government consumption.

Exports of goods and services declined 0.5 percent from 0.4 percent contraction in the previous estimate while imports dropped by 5.6 percent, unchanged from the earlier projection.

On an annualised basis, the world's third-largest economy shrank 7.1 percent compared with a 6.8 percent contraction in the first estimate and following a revised 6.1 percent increase in January-March.

Japan GDP Shrinks More Than Expected


Cabinet Office l Rida l rida@tradingeconomics.com
9/8/2014 10:57:36 AM