AP

Japan’s economy shrinks as consumers hold back on spending

Nov 14, 2022, 7:57 PM | Updated: 8:18 pm

FILE - Shoppers walk into a store at a shopping center in Tokyo on Aug. 17, 2020. The Japanese econ...

FILE - Shoppers walk into a store at a shopping center in Tokyo on Aug. 17, 2020. The Japanese economy has contracted at an annual rate of 1.2% in the July-September quarter, as consumption declined amid rising prices. (AP Photo/Hiro Komae, File)

(AP Photo/Hiro Komae, File)

TOKYO (AP) — The Japanese economy contracted at an annual rate of 1.2% in the July-September quarter, as consumption declined amid rising prices.

Seasonally adjusted real gross domestic product for the world’s third-largest economy shrank 0.3% on-quarter, according to government Cabinet Office data released Tuesday. The annual rate shows how the economy would have grown if the quarterly rate were to continue for a year.

Japan’s GDP, or the sum of the value of a nation’s products and services, was weaker than analysts had expected, coming after three quarters of moderate growth. Like many nations, Japan has suffered as the coronavirus pandemic slammed industrial production and tourism.

Private consumption grew 0.3% in July-September, slowing down from the 1.2% growth recorded the previous quarter. Private investment grew 1.5%, down from 2.4% growth in the previous quarter.

Another factor is the Japanese yen’s fall against other currencies, especially the U.S. dollar. The Federal Reserve has been tightening the key interest rate, but the Bank of Japan has not.

The differential in interest rates tends to boost the value of the currency of the nation with higher interest rates against the nation with zero or minus rates like Japan’s, according to analysts. The U.S. dollar, trading at about 115 Japanese yen a year ago, now costs about 140 yen.

Although the weak yen has generally tended to work as a boon for Japanese exporters like automaker Toyota Motor Corp. and video game developer Nintendo Co., it also makes imports more expensive. The latest GDP data showed dropping exports.

A weak yen is devastating for imports, especially for Japan, imports almost all its oil, as well as much of its food. The war in Ukraine has also sent such prices higher.

Inflation in Japan at about 3% is moderate compared to the U.S. and some other nations. But it’s still noticeable, with everything from cab fares to packaged snacks going up in prices.

In recent decades, Japan has suffered what’s known as deflation, or a continuing downward spiraling of prices. And so widespread price hikes come as a bit of a shock to consumers when wage growth has been relatively slow.

China’s COVID-19 restrictions are also being closely watched because of their great impact on Japan and the Asian region. Although there have been some easing of restrictions, fears are growing about a next wave of infections bringing back lockdowns and other restrictions.

Japanese production was sorely hit by the restrictions, seen in the shortage of supplies in computer chips and other parts.

Some analysts say the Japanese economy will likely gradually recover, although still at risk from what China’s pandemic measures, as well as larger geopolitical tensions like U.S.-China relations.

But there were also signs of hope. Tourists from abroad have returned, starting from last month after more than two years of tight border limits.

“The yen’s depreciation gives tourists better value for money, making Japan more attractive as a destination,” said Hiroyuki Ueno, senior economist at SuMi Trust.

___

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

This satellite image from Planet Labs PBC shows Iran's nuclear site in Isfahan, Iran, April 4, 2024...

Associated Press

Israel, Iran play down apparent Israeli strike. The muted responses could calm tensions — for now

Israel and Iran are both playing down an apparent Israeli airstrike near a major air base and nuclear site in central Iran.

2 days ago

Speaker of the House Mike Johnson, R-La., talks to reporters just after lawmakers pushed a $95 bill...

Associated Press

Ukraine, Israel aid advances in rare House vote as Democrats help Republicans push it forward

The House pushed ahead Friday on a foreign aid package of $95 billion for Ukraine, Israel, Taiwan and other sources of humanitarian support.

2 days ago

southern Arizona rancher George Alan Kelly...

Associated Press

Trial of a southern Arizona rancher charged in fatal shooting of unarmed migrant goes to the jury

Closing arguments were made against a southern Arizona rancher accused of shooting an undocumented migrant on his land to death on Thursday.

3 days ago

Donald Trump's hush money trial: 12 jurors selected...

Associated Press

Although 12 jurors were picked for Donald Trump’s hush money trial, selection of alternates is ongoing

A jury of 12 people was seated Thursday in former President Donald Trump's hush money trial. The proceedings are close to opening statements.

3 days ago

A anti-abortion supporter stands outside the House chamber, Wednesday, April 17, 2024, at the Capit...

Associated Press

Democrats clear path to bring proposed repeal of Arizona’s near-total abortion ban to a vote

Democrats in the Arizona Senate cleared a path to bring a proposed repeal of the state’s near-total ban on abortions to a vote.

4 days ago

Most Americans are sleepy new Gallup poll finds...

Associated Press

Most Americans say they don’t get enough sleep, according to new Gallup poll

A new Gallup poll found that most Americans are sleepy — or, at least, they say they are. Multiple factors play into this.

6 days ago

Sponsored Articles

...

Condor Airlines

Condor Airlines can get you smoothly from Phoenix to Frankfurt on new A330-900neo airplane

Adventure Awaits! And there's no better way to experience the vacation of your dreams than traveling with Condor Airlines.

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

Japan’s economy shrinks as consumers hold back on spending