Jul.-Sep. GDP contracts by annualized real 3%

Japan's latest GDP figures show that the country's economy shrank in the July-September period. It was the first downturn in two quarters as the pandemic weighed on consumer spending.

The Cabinet Office released preliminary GDP figures on Monday. They show that Gross Domestic Product fell 0.8 percent from the previous three months in inflation-adjusted terms. That means an annual contraction of 3.0 percent.

The pullback reflects a drop in consumer spending, which fell 1.1 percent from the April-June quarter.
Personal consumption accounts for more than half of Japan's GDP.

People curtailed travel and dining out amid a pandemic state of emergency in Tokyo, Osaka and other prefectures. Consumers also bought fewer home appliances.

Exports shrank as well, falling by 2.1 percent.

Automakers cut production due to the global chip shortage. Disruptions to Southeast Asian supply chains also played a role.

Government officials expect GDP to return to pre-pandemic levels by the year-end.

Economic Revitalization Minister Yamagiwa Daishiro says, "Now that COVID cases have gone down and the state of emergency has been lifted, we feel the economy is finally picking up and is on the path to recovery. We are hopeful that things will look even brighter in the next quarter."

Yamagiwa says the government will be ready to support the economy if things take a turn for the worse. He says the Kishida administration will lay out such measures on Friday.

The head of Japan's biggest business lobby also expects the Japanese economy to start picking up as more in-person services resume.

Tokura Masakazu, Chairman of the Japan Business Federation, says the only concern is a slump in exports. "The global economy has weakened a little due to a shortage of semiconductors and other products. Companies that rely heavily on exports will start to feel the impact."

Tokura says he hopes production woes will not impede the country's economic growth.