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Japan economy shrinks as natural disasters bite

Japan's economy was concluded in the third quarter of 2018, as disasters from natural disasters prevented exports and consumption. Gross…

Japan’s economy was concluded in the third quarter of 2018, as disasters from natural disasters prevented exports and consumption.

Gross domestic product fell by 1.2 per cent over the three months of September, according to a preliminary reading from Japan’s office, shrinking again after just a quarter of growth.

However, with most analysts convinced that there was a significant feature of Julia’s severe floods in western Japan and September in the order of 6.6 earthquake in Hokkaido, it is small to wake the government or the Bank of Japan.

Growth came under a median forecast for a 1

percent annual decline from the economists polluted by Reuters. However, consumption is expected to accelerate before next year’s increase in turnover tax from 8 to 10 percent.

Weakness spread throughout the economy. Consumption tapped 0.3 percentage points of annual growth, 0.3 percentage points, public investment 0.4 percentage points and net exports 0.3 percentage points.

Final sales of domestic products, which predict underlying domestic demand, fell by an annual 0.9 percent. 19659007] Katsunori Kitakura, leading strategist at Sumitomo Mitsui Trust Asset Managment, pointed to huge rain, typhoon and an earthquake in September that weighed the consumer’s feelings.

“Natural disasters forced consumers to stay indoors and stop factory operations, which led to a slowdown in production and investment activities,” he said. “In addition, the disaster dampened the closure of Kansai International Airport in Osaka, Japan’s second largest city, and led to a fall in inbound demand and international transport.”

Important parts of Japan’s export trade are in the air, and Kansai flights were limited for several weeks. Pictures of natural disasters may also have deterred tourists from Asia.

Kitakura tipped the economy to recover with a 0.7 percent increase in the fourth quarter, “with the business segment that threw the line and steady support from the export sector”.

Japan has had a long economic expansion supported by Prime Minister Shinzo Abe stimulus policy since 2012. The Bank of Japan has bought trillions of yen in government bonds in order to slow down long-term interest rates.

This week exceeded BoJ’s balance sheet for the first time Japan’s annual output. Based on the new GDP figures, the balance sheet accounts for 100.6 percent of annual output, although the figure is of little economic significance.

While the economy has made steady progress, with unemployment down to 2.3 percent, BoJ has been struggling to raise inflation to its 2 percent target. Excluding volatile fresh food and energy prices rose by 0.4 percent a year ago in September.

Mr Abe has promised to use “all measures” to compensate for any economic impact from next year’s increase in consumer tax from 8 to 10 percent, including a small retailer repayment plan and incentives to buy durable goods.

The government is struggling to persuade companies to prepare for the tax increase after it was repeatedly delayed on previous occasions.

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