World’s 3rd Largest Economy, Japan, Ended 2019 with GDP Falling Fast

Japan’s economy shrinks at fastest pace in 6 years, virus clouds outlook
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Before the effects of coronavirus COVID-19 could even begin to be felt, even speculated about, Japan, the world’s third largest economy, ended its final quarter of 2019 contracting at the deepest rate in six years as the combination of the global trade wars and a recent sales tax hike hurt business investment and final demand. CNBC reports:

 Japan’s economy shrank at the fastest pace in six years in the December quarter as a sales tax hike and soft global demand hurt consumption and capital expenditure, keeping policymakers under pressure to prop up growth with additional stimulus. The hit to the world’s third-largest economy comes amid fresh concerns about weakness in the current quarter, as the coronavirus damages output and tourism, stoking fears Japan may be on the cusp of a recession — defined as two straight quarters of decline. Gross domestic product (GDP) fell an annualized 6.3% in the October-December period, faster than a median market forecast for a 3.7% contraction, data released by the government showed on Monday. The drop, which followed a revised 0.5% gain in July-September, was the biggest since a 7.4% decline marked in April-June 2014. The contraction translated into a 1.6% quarter-on-quarter decline, against a median forecast for a 0.9% fall. Private consumption, which makes up more than half of the economy, dropped 2.9%, as households curbed spending after a sales tax hike in October last year. That compared with market forecasts for a 2.0% drop. Capital expenditure fell 3.7% in the fourth quarter, bigger than a median forecast for a 1.6% drop. External demand — or exports minus imports — contributed 0.5 percentage point to GDP growth, while domestic demand knocked 2.1 points off growth. Japanese policymakers had warned that the economy will suffer […]

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