Japan's GDP shrinks as surging costs raise spectre of deeper downturn
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard

Friday
July 01, 2022

Sign In
Subscribe
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
FRIDAY, JULY 01, 2022
Japan's GDP shrinks as surging costs raise spectre of deeper downturn

Global Economy

Reuters
18 May, 2022, 09:55 am
Last modified: 18 May, 2022, 10:17 am

Related News

  • Apple hikes Japan price of iPhone by nearly a fifth
  • Japanese asked to save power as country's east sizzles
  • Japan power plant shutdown raises fear of shortage in sweltering heat
  • Cooperation by US and allies a step toward 'Asian NATO': N Korea media
  • Govt signs Tk11,000cr loan agreements with Japan for two projects

Japan's GDP shrinks as surging costs raise spectre of deeper downturn

Reuters
18 May, 2022, 09:55 am
Last modified: 18 May, 2022, 10:17 am
Businessmen wearing protective face masks walk on a pedestrian bridge, amid the spread of the coronavirus disease (COVID-19), in a business district in Tokyo, Japan June 24, 2020. REUTERS/Issei Kato
Businessmen wearing protective face masks walk on a pedestrian bridge, amid the spread of the coronavirus disease (COVID-19), in a business district in Tokyo, Japan June 24, 2020. REUTERS/Issei Kato

Highlights:

  • Q1 annualised GDP -1.0% vs forecast -1.8%
  • Consumption, import bills weigh on growth
  • Ukraine war, Covid-19, cost-push inflation cloud outlook
  • Weak data may prompt call for more spending as polls loom

Japan's economy shrank for the first time in two quarters in the January-March period as Covid-19 curbs hit the service sector and surging commodity prices created new pressures, raising concerns about a protracted downturn.

The decline presents a challenge for Prime Minister Fumio Kishida's drive to achieve growth and wealth distribution under his "new capitalism" agenda, stoking fears of stagflation - a mix of tepid growth and rising inflation.

The world's No. 3 economy fell at an annualised rate of 1.0% in January-March from the previous quarter, gross domestic product (GDP) figures showed, slower than a 1.8% contraction expected by economists. That translated into a quarterly drop of 0.2%, the Cabinet Office data showed, versus market forecasts for a 0.4% drop.

The weak reading may pressure Kishida to release even more stimulus with upper house elections pencilled in for July 10, following the 2.7 trillion yen ($20.86 billion) in extra budget spending compiled on Tuesday.

"The economy will return to growth in the coming quarters but it won't be a dramatic recovery, leaving the possibility of further spending wide open as elections draw near," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

"The lockdown in China and US rate hikes as well as the Ukraine crisis could weigh on external demand. Declines in household and corporate real income due to worsening terms of trade may hamper recovery in domestic demand."

Private consumption, which makes up more than half of the economy, was little changed, the data showed, better than a 0.5% fall expected by economists but below the upwardly revised 2.5% growth seen in the December quarter.

Many analysts expect Japan's economy to rebound in coming quarters, helped by easing coronavirus curbs.

However, doubts remain over whether the recovery will be V-shaped, with surging energy and food prices boosted capping consumption.

Adding to the gloom, business optimism among Japan's manufacturers hit a more than one-year low as firms struggled with rising import costs due to a weak yen and higher raw material prices, the Reuters Tankan poll showed.

YEN PRESSURES

Japan's export-reliant economy got little help from external demand, with net exports knocking 0.4 percentage point off GDP growth, a tad larger than the negative contribution of 0.3 percentage point seen by economists.

The weak yen and surging global commodity prices helped imports of goods and services including cellphone and medicine grow 3.4%, overwhelming export growth of 1.1%.

Capital spending rose 0.5% versus an expected 0.7% increase and following a 0.4% rise in the previous quarter, driven by general-purpose machinery and research and development payments. That helped domestic demand contribute 0.2 of a percentage point to GDP growth.

For the whole of fiscal 2021 to March, the economy grew 2.1%, posting the first gain in three years.

Economy minister Daishiro Yamagiwa said the economy has not returned to pre-pandemic levels but that further downside would likely be limited.

"We expect GDP growth to disappoint across 2022 due to the hit to household income from higher inflation and signs that elderly consumers remain wary of catching the virus," Tom Learmouth, Japan economist at Capital Economics, wrote in a note.

Top News / World+Biz

Japan / Japan economy / Japanese yen / GDP drop / GDP

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • A closed Ikea city shop at a shopping mall in Moscow, earlier in April. Photographer: Kirill Kudryavtsev/AFP/Getty Images/Bloomberg
    Sanctions-ravaged Russia offers opportunities for Indian firms
  • Evaly left with products worth Tk25cr 
    Evaly left with products worth Tk25cr 
  • EU’s REX system: Exporters now enjoy hassle-free certification of goods origin
    EU’s REX system: Exporters now enjoy hassle-free certification of goods origin

MOST VIEWED

  • A trader in London waits for European stock markets to open early on June 24, 2016, after Britain voted to leave the European Union. REUTERS/Russell Boyce
    Global investors turn sellers in equity funds on recession fears
  • A closed Ikea city shop at a shopping mall in Moscow, earlier in April. Photographer: Kirill Kudryavtsev/AFP/Getty Images/Bloomberg
    Sanctions-ravaged Russia offers opportunities for Indian firms
  • A man selling vegetables waits for customers at his makeshift stall at the Empress Market in Karachi. — Reuters/File
    Inflation in Pakistan rises to whopping 21.3pc in June, highest in over 13 years
  • A currency trader counts Pakistani rupee notes as he prepares an exchange of dollars in Islamabad, Pakistan December 11, 2017. REUTERS/Caren Firouz/Files
    Pakistan finance ministry sees more tough times ahead
  • Representational Image. Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File Photo
    India raises import tax on gold to 12.5% from 7.5%
  • An employee measures a newly manufactured ball mill machine at a factory in Nantong, Jiangsu province, China June 28, 2019. REUTERS/Stringer
    Asia's factories feeble despite China bounce, feeds global recession fears

Related News

  • Apple hikes Japan price of iPhone by nearly a fifth
  • Japanese asked to save power as country's east sizzles
  • Japan power plant shutdown raises fear of shortage in sweltering heat
  • Cooperation by US and allies a step toward 'Asian NATO': N Korea media
  • Govt signs Tk11,000cr loan agreements with Japan for two projects

Features

Photo: Collected

Sapiens – A Graphic History 

7h | Book Review
Black-naped Monarch male  Photo: Enam Ul Haque

Black-naped Monarch: A sovereign who never abandoned the Indian subcontinent

8h | Panorama
The 136-year-old company on its last legs

The 136-year-old company on its last legs

9h | Features
Agricultural worker walks between rows of vegetables at a farm in Eikenhof, south of Johannesburg, South Africa. Photo: Reuters

With vast arable lands, why is Africa dependent on imported grain?

6h | Panorama

More Videos from TBS

Dhaka University celebrating 102nd founding anniversary today

Dhaka University celebrating 102nd founding anniversary today

6h | Videos
Ctg Int'l Trade Fair returns after a 2-year hiatus without Covid restrictions

Ctg Int'l Trade Fair returns after a 2-year hiatus without Covid restrictions

7h | Videos
Bangladeshis among top 6 nationalities seeking asylum in Europe

Bangladeshis among top 6 nationalities seeking asylum in Europe

8h | Videos
RUET organises Robotronics 2.0

RUET organises Robotronics 2.0

8h | Videos

Most Read

1
Padma Bridge from satellite. Photo: Screengrab
Bangladesh

Padma Bridge from satellite 

2
Meet the man behind 'Azke amar mon balo nei'
Splash

Meet the man behind 'Azke amar mon balo nei'

3
Photo: TBS
Bangladesh

Motorcycles banned on Padma Bridge 

4
Photo: Collected
Economy

Tech startup ShopUp bags $65m in Series B4 funding

5
Photo: Courtesy
Corporates

Gree AC being used in all parts of Padma Bridge project

6
World Bank to give Bangladesh $18b IDA loans in next five years
Economy

World Bank to give Bangladesh $18b IDA loans in next five years

EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2022
The Business Standard All rights reserved
Technical Partner: RSI Lab
BENEATH THE SURFACE
Workers with minimum safety equipment are busy producing iron rods at a local re-rolling mill at Postogola in Old Dhaka. Reused metals from the adjacent shipyards in Keraniganj have played a major role in establishing several such mills in the area. PHOTO: Mumit M

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net