The Japanese economy contracted in the third quarter between July and September at an annual rate of 1.2% as consumption declined despite rising prices.
According to official data from the Office of the Council of Ministers published on Tuesday, the third largest economy in the real world Gross domestic product fell by 0.3% quarterly. If the quarterly rate held for a whole year, the annual rate shows how the economy would develop.
Japan’s GDP, which measures the total value of a country’s products and products services, was weaker than expected after a sustained increase of three quarters. Like many other countries, Japan has been affected by the destruction of industrial productivity caused by the coronavirus pandemic tourism.
After growing by 1.2% in the previous quarter, private consumption increased by 0.3% from July to September. Private investment grew by 1.5%, slower than the 2.4% increase in the previous quarter.
Decrease Japanese yen against other currencies, especially the US dollar, is another matter. The Federal Reserve raises its benchmark interest rate, but the Bank of Japan does not.
According to economists, the difference in interest rates tends to increase the value of a country’s currency relative to a country with zero or negative interest rates, e.g. Japan. A year ago, the US dollar was worth about 115 Japanese yen. Today it is worth about 140 yen.
While Japanese exporters such as carmaker Toyota Motor Corp video game Founder of Nintendo Co. it has largely benefited from the weak yen, which is also driving up import costs. The latest GDP data showed a decline in exports.
A weak yen is bad for imports, especially for Japan, which imports virtually all of its oil and most of its food. Such prices have increased as a result of the fighting in Ukraine.
Compared to the United States and some other countries, Japan’s inflation rate, which is around 3%, is moderate. But the price goes up on everything from packaged snacks for taxi fares, are still visible.
Japan has experienced what is known as deflation, or a sustained fall in prices, in recent decades. Consumers may be little surprised by the broad rise in prices as wage growth has been relatively slow.
Significant Chinese influence COVID-19 restrictions imposed on Japan and the Asian area is another reason why they are closely watched. Despite the loosening of some restrictions, fears are growing that a new wave of diseases will bring back lockdowns and other restrictions.
The shortage of computer chips and other components is proof that the restrictions are adversely affecting Japanese production.
According to some observers, the Japanese economy is likely to recover gradually, but it remains vulnerable to China’s economic actions and more significant geopolitical factors problems such as relations between the United States and China.
But there were also optimistic signals. After more than two years rigorous border restrictions, foreign tourists started returning last month.
According to Hiroyuki Ueno, senior economist at SuMi Trust, “the depreciation of the yen gives tourists better value for money, making Japan more attractive how destiny“.
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