Japan’s GDP Contracts Sharply

A revised reading on Japan’s gross domestic product (GDP) showed the economy contracted an annualized 7.1 percent in the second quarter, worse than initial estimates of a 6.8 percent as a nationwide consumption tax that took effect in April dragged on its recovery.

This marked the biggest contraction since the first quarter of 2009, when the global financial crisis hit Japan’s export sector, and was worse than expectations in a Reuters poll for a revised reading of 7.0 percent.  On a quarterly basis the economy contracted 1.8 percent, wider than an initial reading of 1.7 percent.

“While the headline [quarterly] figure was in line with expectations, the details were rather discouraging: non-residential investment was revised from a 2.5 percent [quarterly] fall to a 5.1 percent [quarterly] plunge. The only reason why overall demand didn’t decline even more sharply was that inventories bolstered output by 1.4 percentage points instead of the initially estimated 1.0,” Marcel Thieliant, Japan economist at Capital Economist said in a note.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.