International Economy Q3 Contracts 2.1%, Japan on the Verge of Recession News – 48 minutes ago

Jakarta, CNBC Indonesia – Japan’s economy contracted 2.1% in the third quarter of 2023, stopping the expansion of consumption and exports for two consecutive quarters. This will complicate central bank efforts to gradually phase out massive monetary stimulus amid rising inflation.

The data shows that high inflation has a negative impact on household spending, and adds to the suffering for manufacturers due to slowing global demand, including in China.

“Given the absence of a growth engine, I would not be surprised if the Japanese economy contracted again this quarter. The risk of Japan falling into recession cannot be ruled out,” said Takeshi Minami, chief economist at Norinchukin Research Institute, quoted ReutersWednesday (15/11/2023).

“Weak growth and the specter of slowing inflation could delay the central bank’s exit from negative interest rates,” he said.

Gross domestic product (GDP) in the world’s third largest economy contracted by 2.1% in the third quarter. The contraction was much larger than the market’s median estimate of a 0.6% annual decline.

This result reversed from an expansion of 4.5% in the previous quarter.

This weak figure reflects sluggish consumption and capital spending, dashing policymakers’ hopes of a post-pandemic recovery in domestic activity to offset weakening external demand from China and other countries.

Consumption stagnated in July-September after falling 0.9% in the previous quarter, well below economists’ median estimate of 0.2% growth.

Capital spending fell 0.6% in the third quarter after falling 1.0% in April-June, confounding market estimates of a 0.3% rise and casting doubt on the central bank’s view that strong corporate investment will support growth.

[Gambas:Video CNBC]

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