The economy shrank 0.7 percent in real terms during the July-September quarter compared with the previous three months, marking its fourth consecutive contraction, the longest ever in the postwar years, the Economic Planning Agency announced Thursday.
It was the first time the EPA recorded four straight periods of negative growth in real term gross domestic product; it began compiling statistics in 1955.
The economy now stands over the precipice of recording a second consecutive year of negative GDP growth.
The EPA calculated that GDP shrank at a rate of -0.7 percent in real terms, or an annualized -2.6 percent, compared with the April-June quarter.
EPA chief Taichi Sakaiya told a news conference Thursday that although the figures were bad, the dismal showing had been expected. “I must say that the nation is in a severe economic state,” he said. “As a whole, the effect of economic stimulus measures introduced in April, worth 16 trillion yen, was barely visible in the July-September quarter.”
Sakaiya nonetheless pointed out that signs of recovery were present in some indexes, such as public works projects, which registered a 3.6 percent growth as the stimulus measures began to take effect in autumn.
Private demand, however, failed to follow. Sakaiya said corporate income and investment in equipment, as well as individual consumption, remained considerably low in the July-September period.
According to the EPA statistics, external demand, which refers to net exports of domestic goods and services to foreign countries, grew 0.3 percent from the previous quarter but was offset by internal demand, which shrank 0.9 percent from the previous term.
Private consumption fell 0.3 percent from the previous quarter, marking the second consecutive negative quarter. Housing expenditures in the July-September quarter plummeted 6.2 percent from the April-June period, which posted a 2.1 percent increase, according to the showing.
Investment in equipment shrank 4.6 percent, making it the fourth consecutive negative figure since the October-December quarter of fiscal 1997.
As for foreign trade, exports were up 1.6 percent — the first time in three quarters — but imports logged their sixth negative quarter in a row, at -0.4 percent, reflecting weak domestic demand.
The GDP deflator, the leading inflation gauge, posted zero growth, compared with a climb of 0.2 percent in the April-June period.
Meanwhile, Japan’s real gross national product — GDP plus net income from abroad — slid 0.1 percent to 484.138 trillion yen. The decline works out to an annualized rate of -0.3 percent.
In a belated drastic revision, the EPA in October reversed its rosy annual economic growth projection for fiscal 1998 from 1.9 percent to -1.8 percent.
Sakaiya, however, now says achieving that is doubtful. To attain it, the economy would have to grow by about 0.4 percent from the previous quarter in each of the remaining two quarters, he said.
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