Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Japan's Q3 GDP slump seen slightly bigger than expected on soft capex: Reuters poll

Published 12/02/2021, 11:26 PM
Updated 12/02/2021, 11:50 PM
© Reuters. 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

© Reuters. 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

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.

© Reuters. 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

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.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.