Japan: GDP contracts sharply in Q3
November 12, 2012
In the third quarter, GDP declined 3.5% over the previous quarter in seasonally adjusted annualised terms (saar). The print contrasted the 0.3% rise tallied in the previous quarter and represented, in fact, the sharpest fall recorded since Q1 2011. That said, the result was broadly in line with market expectations that had GDP falling 3.4%. On an annual basis, economic activity expanded a paltry 0.1% in the third quarter (Q2 2012: +3.3% year-on-year). The domestic side of the economy deteriorated markedly amid a sharp decline in both total consumption and investment. Private consumption declined 1.9% in the third quarter (Q2: -0.4% quarter-on-quarter saar), whereas public spending expanded 1.4% (Q2: +1.9% qoq saar). On the other hand, private non-residential investment plummeted 12.1% (Q2: +3.8% qoq saar), suffering the steepest fall since Q2 2009. The external sector also deteriorated in the third quarter. Exports of goods and services contracted a whopping 18.7% over the previous quarter in annualised terms (Q2: +5.3% qoq saar) amid falling shipments to China due to the territorial dispute regarding the Senkaku/Diaoyu islands. Meanwhile, imports declined 1.4% (Q2: +7.3% qoq saar) partially due to lower fuel purchases. As a result, the external sector's annualised net contribution to overall growth plunged from minus 0.2 percentage points in the second quarter to minus 2.9 percentage points in the third.