Japanese economic growth has been revised sharply lower

Photo by Adam Pretty/Getty Images

Just three weeks ago the Japanese economy was looking swell.

According to preliminary GDP estimates offered by the government, the economy expanded at a seasonally adjusted annual rate (SAAR) of 2.2% in the September quarter, the fastest pace seen seen since the March quarter 2015.

Great news, a strong result for the previously struggling economy.

However, there was just one problem. It didn’t grow anywhere near that pace.

The latest reading on third quarter GDP, released on Thursday, revealed the economy grew by 1.3% (SAAR), well below the initial estimate and expectations for an upgrade to 2.4%.


Explaining the decline in the annualised terms, real quarterly GDP in seasonally adjusted terms was revised down from an increase of 0.5% to 0.3%. Economists had been expecting that figure to be revised up to 0.6%.

The Japanese Cabinet Office said that business investment fell by 0.4%, below the 0% preliminary estimate, which subtracted 0.1 percentage points from quarterly GDP.

Inventories also subtracted 0.3 percentage point from growth, more than 0.1 percentage point decline reported previously.

Those declines were partially offset by an upward revision to private consumption, which accounts for around 60% of the entire Japanese economy.

It expanded by 0.3%, higher than the 0.1% increase seen previously, adding an additional 0.2 percentage points to quarterly GDP.

Public demand was also revised up from an increase of 0.2% to 0.3%, adding 0.1 percentage points to quarterly figure.

The Japanese government recently adopted a new base year for calculating GDP, leading to revisions to prior data. According to economists, this made forecasting the revised GDP figure more difficult on this occasion.

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