Japan’s economy slipped into a contraction in the third quarter, decreasing at an annual pace of 2.1 per cent as consumption and investments shrank, the government reported Wednesday.
Real gross domestic product, which measures the total value of a nation’s products and services, fell 0.5 per cent in the July-September period for the world’s third largest economy, the Cabinet Office said. That would produce a 2.1 per cent drop if the quarter’s performance continued for a full 12 months.
The downturn came after the economy grew a revised 3.7 per cent in the first quarter and a revised 4.5 per cent in the second quarter on an annualized basis, according to the government figures.
The third quarter’s performance was far worse than what had been expected, according to the financial services company ING, which had forecast an annual contraction of 0.5 per cent.
“Most of the miss in the consensus forecast came from weaker-than-expected domestic demand items, such as consumer spending, business investment and inventory accumulation,” Robert Carnell, ING’s head of research for the Asia-Pacific area, said in a report.
Private consumption shrank an annualized 0.2 per cent during the quarter, while corporate investment decreased 2.5 per cent.
Economic activity in the previous two quarters got a boost from recovering exports and inbound tourism. Social restrictions related to the COVID-19 pandemic have gradually eased, allowing for more travel and a fix to the crimped supply chain for production.
Exports managed to eke out 0.5 per cent growth in the latest quarter, in contrast to a 3.2 per cent rise in the second quater. Auto exports have recovered after stalling over the shortage of computer chips and other parts. Also adding to exports was tourism revenue.
Public demand, which includes government spending, rose at an annual pace of 0.6 per cent in the latest quarter.
Given the numbers, Japan’s central bank isn’t likely to consider any move toward higher interest rates.
The Bank of Japan has taken a super-easy monetary policy for years, with zero or below-zero interest rates aimed at energizing an economy long beset by deflation, which reflects the stagnation that has plagued Japan with its aging and shrinking population.
Some analysts said the sharp contraction could be temporary.
Prime Minister Fumio Kishida has pushed a 17 trillion yen (US$113 billion) stimulus package, including tax cuts and household subsidies. A supplementary budget for its funding recently won parliamentary approval.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
