Business / Economy

Bad weather may have slashed economic growth in July-September

Kyodo

Bad weather this summer, including successive typhoons, may have pushed economic growth down by 0.8 percentage point to 2.4 points in annualized real terms in the July-September quarter, the government said.

The estimate, presented Wednesday by the Cabinet Office to a meeting of the Council on Economic and Fiscal Policy, comes amid growing fears the economy is still lethargic after stalling in the wake of the first stage of the sales tax hike, which raised it to 8 percent on April 1.

“The economy showed signs of some weakness this summer,” Prime Minister Shinzo Abe said during the meeting. “We need to carefully monitor how the economy will recover down the road.”

According to the Cabinet Office, bad weather is forecast to have trimmed private spending — accounting for around 60 percent of Japan’s gross domestic product — by 0.3 point to 1.0 percentage point from the previous quarter on an inflation-adjusted basis during the three months through September.

The Japan Center for Economic Research said last month that the economy is expected to rebound by an annualized 4.0 percent in real terms in the July-September quarter, citing the average projection of 41 private-sector economists.

The economy plummeted by an annualized real 7.1 percent in the April-June quarter, its worst setback since the first quarter of 2009, when it tumbled an annualized 15.0 percent after the 2008 global financial crisis unfolded.

The July-September GDP data will be closely watched as Abe has said he will use it to make a final decision.

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