Japan’s GDP contracted less than expected

According to recent data, gross domestic product of Japan declined over a three-month period to the end of September. The decline turned out to be less than it was expected, as GDP contracted an annualized 0.8% in comparison with the previous period. The initial estimation of the contraction was 1.2%, while economists expected GDP to decline by 1%.

The negative effect of the weakening yen was reduced by higher exports, while the volume of capital spending by firms didn’t change.

The economy downturn was additionally softened by a buildup of inventories. However, this fact also signals insufficient demand for the products. Consumption levels were also lower than expected, which is linked to a worsened situation with the spread of COVID in summer and acceleration of inflation.

Recent data didn’t show enough improvement to wash away officials’ concerns over the economic stability of the country. The year 2023 is approaching, along with its gloomy prospects and possible recession in major foreign markets.

At the same time, according to economists’ estimates, Japanese economy might be supported by private sector spending and services consumption this quarter. Consumer spending has already been fueled by unsatisfied demand left from the summer wave of COVID. But still, this growth might be limited by the recent outburst of the infection.