Japan Q3 GDP growth plunges to three-year low at 1.2%

The decline is driven by a slowdown in external and domestic demands.

Japan’s economic growth contracted by an annualised rate of 1.2% in Q3 from a 3.0% expansion in Q2.

The slowdown, according to an analysis by UOB, is dragged by a decline in external and domestic demand which dropped by 0.1ppt and 0.2ppt respectively. Private spending also slowed to 0.1% QoQ.

Public fixed investments also contracted to 1.9% QoQ from -0.3%. Despite the 1.8% QoQ decrease in external demand, housing investments grew by 0.6% QoQ.

Furthermore, trade policy developments are being seen as a key downside risks as the Trump administration is proposing to put tariffs on automobile imports from Europe and Japan.

Japan’s Economy Minister Toshimitsu Motegi attributed the economic decline to weaker domestic consumption brought by natural disasters and fall in exports.

“Beyond the temporary disruption caused by a series of serious natural disasters in 3Q, we
are turning increasingly cautious that moderating global demand in the next few quarters
could be met with increasing global trade uncertainties,” Alvin Liew, senior economist at UOB, said.

UOB now expects a 1.0% GDP growth for 2018, 0.2% lower than their previous prediction last September.

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