Japan's GDP shrinkage in July-Sept. downgraded to annualized 3.6 percent

Kyodo News

Posted at Dec 08 2021 11:56 AM

TOKYO - Japan's economy in the July-September period shrank an annualized real 3.6 percent from the previous quarter, downgraded from the 3 percent contraction initially reported, as a technical change in the way seasonal adjustments are made led to a larger recorded fall in private consumption, government data showed Wednesday.

Private consumption, which accounts for more than half of the country's gross domestic product, fell 1.3 percent, revised down from a 1.1 percent decline, as spending on durable goods and services was lower amid the coronavirus pandemic, according to the Cabinet Office.

The overall downward revision reflected a new method in calculating seasonal adjustments introduced to give a better grasp on the state of the economy which has been battered by the public health crisis, an official told reporters.

The first decrease in two quarters in real GDP, the total value of goods and services produced in the country adjusted for inflation, corresponds to a 0.9 percent decline on a seasonally adjusted quarterly basis.

The revised figure was worse than the average projection of a 2.9 percent annualized fall by private-sector economists polled by Kyodo News.

During most of the reporting quarter, Tokyo, Osaka and some other prefectures were under a COVID-19 state of emergency. People were asked to refrain from non-essential outings and eateries were requested to close earlier and not to serve alcohol.

In household spending, expenditure on durable goods dropped 16.3 percent from the previous quarter, marking the largest fall since comparable data became available in 1994.

Spending on cars was sluggish, as major automakers were forced to cut output due to parts supply disruptions in Southeast Asia caused by a surge in COVID-19 infections and a global semiconductor shortage.

Public investment was also revised down to a 2.0 percent drop from a 1.5 percent decline.

An initially reported 3.8 percent decrease in capital spending was revised upward to a 2.3 percent fall, taking into account Financial Ministry data released last week.

On Dec. 1, the ministry reported that capital spending by all nonfinancial Japanese companies in the same quarter rose 1.2 percent from a year earlier.

Exports fell 0.9 percent and imports sagged 1.0 percent, both upgraded from 2.1 percent and 2.7 percent declines, respectively.

Nominal GDP, not adjusted for inflation, contracted 1.0 percent, or an annualized 4.1 percent, in the reporting quarter, revised down from a 2.5 percent annualized shrinkage initially reported.