Japan's economy shrinks as natural disasters bite
Japan's economy was signed in the third quarter of 2018, as disruptions from natural disasters prevented exports and consumption.
Gross domestic product fell by 1.2 per cent in the three months of September, according to a preliminary reading from Japan's cabinet office, shrinking after only a quarter of growth.
However, with most analysts convinced that there was a significant move from July's severe floods in western Japan and September's magnitude 6.6 earthquake in Hokkaido, there is little to warn the government or the Bank of Japan.
Growth figures came under a median forecast of a 1[ads1] percent annual decline from the economists asked by Reuters. However, the consumption is expected to accelerate next year's increase in sales tax from 8 to 10 per cent.
Weakness was widely spread across the economy. Consumption hit 0.3 percentage points of annual growth, stocks 0.3 percentage points, public investment 0.4 percentage points and net exports 0.3 percentage points.
Final sales of domestic product, which tracked underlying domestic demand, fell by an annual 0.9 percent. 19659007] Katsunori Kitakura, leading strategist at Sumitomo Mitsui Trust Asset Managment, pointed to heavy rain, typhoon and an earthquake in September after weighing on consumer feelings.
"Natural disasters forced consumers to remain indoors and stop factory operations that led to a decline in production and investment activities," he said. "In addition, disasters forced the closure of Kansai International Airport in Osaka, Japan's second largest city, leading to a fall in incoming demand and foreign shipment."
Important parts of Japan's export trade go on air and flights from Kansai were limited for several weeks. Pictures of natural disasters can also have discouraged tourists from Asia.
Kitakura tapped the economy to recover with a 0.7 percent increase in the fourth quarter, "with industry tauing the line and constant support from the export sector"
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Japan has had a long economic expansion supported by the stimulus policy of Prime Minister Shinzo Abe since 2012. The Bank of Japan has bought trillions of yen in government bonds in order to reduce long-term interest rates.
This week exceeded the size of BoJ's balance Japan's annual output for the first time. Based on the new GDP figures, the balance is 100.6 percent of the annual output, although the figure is of little economic importance.
While the economy has made steady progress, with unemployment to 2.3 percent, BoJ has struggled to raise inflation to its 2 percent target. With the exception of volatile fresh food and energy, prices rose by 0.4 per cent a year ago in September.
Mr Abe has promised to use "all measures" to compensate for any financial consequences from next year's increase in taxes on taxes from 8 to 10 percent, including a cash reward scheme for small retailers, and incentives to buy durable goods.
The government is struggling to convince the companies to prepare for the tax increase after repeatedly delayed on previous occasions.
