Japan Q3 GDP down 1.2% QoQ due to inflation and rising imports

Due to the impact of COVID-19, private consumption slowed down... Decrease in external demand contribution due to increased imports

[Image source=Asia Economy]

[Asia Economy Reporter Lee Ji-eun] Japan's third-quarter (July-September) gross domestic product (GDP) declined for the first time in four quarters due to a slowdown in personal consumption caused by the spread of COVID-19 and an increase in imports.

According to the Cabinet Office of Japan, which announced the third-quarter GDP on the 15th, GDP decreased by 1.2% quarter-on-quarter (annualized). Compared to the previous quarter, it fell by 0.3%. This marks the first decline in Japan's real GDP, excluding the effects of price changes, since the third quarter of last year.

Personal consumption, which accounts for more than half of GDP, increased only slightly by 0.3% compared to the previous quarter. NHK analyzed, "Due to the spread of COVID-19, demand for services such as travel in the third quarter decreased more than expected, and rising energy and food prices caused personal consumption to stall."

The main factor driving the GDP decline in the third quarter was the increase in imports. Japan's imports rose by 5.2% in the third quarter, resulting in a contribution of -0.7% from net exports to the overall GDP. The contribution of domestic demand to GDP was 0.4%, with a significant impact from a 17.1% increase in service demand compared to the previous quarter.

Housing investment decreased by 0.4%, marking five consecutive quarters of decline.

The Nihon Keizai Shimbun stated, "The sharp rise in resource and energy prices has worsened trade conditions, significantly impacting the Japanese economy," and forecasted, "It seems increasingly difficult for GDI (Gross Domestic Income) and GNI (Gross National Income) to grow further."

This content was produced with the assistance of AI translation services.