TOKYO: Japan’s economy shrank slightly faster than initially reported in the third quarter, as a sharp rise in local Covid-19 cases hit private consumption and a global chip supply shortage hurt corporate sentiment.
The deeper contraction is a setback for policymakers hoping easing supply shortages and loosened pandemic curbs would support a recovery in the world’s third-largest economy this quarter, report agencies.
The data, which was worse than economists’ median forecast for a 3.1 per cent drop, equals a real quarter-on-quarter contraction of 0.9 per cent from the prior quarter, versus a preliminary 0.8 per cent drop.
“This confirms that economic conditions were stagnating in the July-September quarter,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.
“Growth turned negative due to the resurgence of the coronavirus.” The faster decline was mainly due to a larger fall in private consumption, which makes up more than half of gross domestic product, and shrank 1.3 per cent from the previous three months, worse than the initial estimate of a 1.1 per cent drop.
Consumption fell as bad weather kept shoppers at home and a global chip shortage hit sales of cars and electronics due to production snags, a government official said.
“A large contraction in durable goods (spending) indicated that car production cuts had a huge impact,” said Wakaba Kobayashi, an economist at Daiwa Institute of Research.
The data showed public investment dropped 2.0 per cent versus the initial estimate of a 1.5 per cent decline, while capital spending saw a smaller fall, shrinking 2.3 per cent from the prior quarter, compared with a 3.8 per cent preliminary drop.
The net contribution of exports to the GDP change was zero, offset by imports. Meanwhile, domestic demand pulled GDP down by 0.9 percentage point, matching a preliminary contribution.