Japan revises Q3 GDP upwards amid global recession fears

Japan’s economy, the world’s third-largest, shrank less than initially estimated in the third quarter, bolstering a view that it is slowly recovering from stagnation brought on by Covid-19, even as key export markets show further signs of weakness. .

The Japanese Gross Domestic Product (GDP) registered an annualized quarterly contraction of 0.8%, according to data from the Cabinet Office released this Thursday (8), after having been informed in an initial estimate of a drop of 1.2%.

The expectation in a Reuters poll of economists was for an annualized decline of 1.1%.

The revision was driven by the upward shift in private inventories after an annualized quarterly growth of 4.5% in the previous quarter.

Japan’s economy unexpectedly shrank in the third quarter as global recession risks, China’s weak economy, a weak yen and higher import costs hurt consumption and businesses.

The economy may rebound in the current quarter as an easing of semiconductor and auto supply restrictions and the lifting of border controls due to Covid-19 boost tourism, some analysts say.

However, others are bracing for the global economy to slip into recession next year, dealing a heavy blow to trade-dependent Asian exporters such as Japan.

“The resumption of tourism and campaigns to promote domestic travel will boost private consumption, helping the economy return to growth in the October-December quarter,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Going forward, a global slowdown led by rising interest rates in advanced economies and a slump in China’s real estate sector will weigh on the Japanese economy, possibly causing a technical recession, or two consecutive quarters of contraction in the first half of next year.”