Second-quarter GDP changed to fall

Revised data show nation in recession

Kyodo

The economy shrank for a second quarter in a row in the quarter ended in September, revised government data said Monday, indicating that a mild recession has begun amid sluggish global demand.

The Cabinet Office said gross domestic product fell at an annual pace of 3.5 percent in inflation-adjusted terms, unchanged from preliminary data, but it revised the GDP figures for the preceding quarter to a small contraction, matching the textbook definition of a recession.

With the data presenting a clearer view that the economy is contracting, political pressure is likely to rise on the government to craft fresh stimulus measures after this Sunday’s general election and for the Bank of Japan to further loosen monetary policy.

GDP shrank 0.9 percent in July-September, unrevised from the preliminary data released Nov. 12, as an upward revision in private-sector demand was offset by a downgrading of exports and public investment.

For the April-June quarter, GDP was revised downward to a 0.03 percent fall, or an annualized 0.1 percent decline, down from an earlier figure of a 0.1 percent increase, or an annualized 0.3 percent gain.

Corporate capital spending fell an upwardly revised 3.0 percent, tamer than the 3.2 percent deceleration reported earlier. Private consumption, accounting for some 60 percent of GDP, was upgraded to a 0.4 percent fall from a 0.5 percent decline due largely to increased spending on automobiles and televisions.

On the other hand, exports were downgraded to a 5.1 percent drop from the earlier reported 5.0 percent fall. Public investment was also revised down to a 1.5 percent rise from a 4.0 percent gain.

Noting the economy is likely to have entered a recessionary phase after hitting its peak in March, Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co., said the economy is “likely to stay weak for a while.”

“The data reaffirmed that the momentum of reconstruction demand (from the massive quake last year) has been slowing,” he said. “While reconstruction demand is not strong enough to bolster the economy, external demand has been sluggish.”

GDP is the total value of goods and services produced domestically. Real numbers are adjusted for price and seasonal variations.