A woman walks past at a shopping district, amid the coronavirus disease (COVID-19) pandemic in Tokyo, Japan August 17, 2020. REUTERS/Kim Kyung-Hoon/File Photo
December 3, 2021
By Kantaro Komiya
TOKYO (Reuters) – Japan’s economy likely contracted at a faster-than-expected pace in the July-September quarter, a Reuters poll showed on Friday, as capital spending stalled among companies hit by supply constraints.
The world’s third-largest economy likely shrank an annualised 3.1% in the third quarter, the poll of 19 economists showed, a slightly bigger slump than the 3.0% contraction in the government’s preliminary estimate released last month.
Separate data is expected to show household spending posted an annual drop for the third straight month in October, though the fall was smaller than in the previous two months, a sign that consumer sentiment had improved as COVID-19 cases remained low.
While pressures on domestic consumption are easing, next week’s data suggests it may take time for Japan’s economy to rebound even as policymakers have kept monetary policy loose and fiscal policy expansionary to help the pandemic recovery.
Economists expected the gross domestic product (GDP) revision to show capital expenditure shrank 3.9% in July-September, a slightly bigger contraction than the 3.8% drop previously forecast by the government. Finance ministry data this week showed a slowdown in business spending due to supply chain woes.
Economists at SMBC Nikko Securities said Japan’s economy continued to suffer a double whammy from the Delta variant and the auto industry’s supply problems in the third quarter.
“As the auto sector’s supply constraints ease, Japan’s economy is expected to clearly re-accelerate its growth in October-December,” they said, while flagging the new Omicron variant could pose a downside risk to the outlook.
Household spending in October likely fell 0.6% from a year earlier, less than a 1.9% drop in September, the poll showed, as gradual easing of COVID-19 curbs helped consumers to spend more.
The government will release the revised third-quarter GDP data on Dec. 8 at 8:50 a.m. local time (Dec. 7 at 2350 GMT), and announce household spending data on Dec. 7 at 8:30 a.m.(Dec. 6 at 2330 GMT).
Separate data due on Dec. 10 at 8:50 a.m. (Dec. 9 at 2350 GMT) is expected to show wholesale inflation accelerated further to a new 40-year high. The corporate goods price index likely gained 8.5% in November from a year earlier, after rising 8.0% in October.
(Reporting by Kantaro Komiya; Editing by Ana Nicolaci da Costa)
Source: One America News Network
