The Japanese government stated that the Japanese economy dropped at a rate of 3.6% per year from July to September. That is due to the wave of coronavirus infections suppressing travel and other activities.
The government stated that its previous quarter’s estimate was revised from the 3.0% contraction reported earlier, reflecting weak consumer spending and trade.
Quarterly, the economy has contracted by 0.9% according to the measurement used by most economies, compared with the 0.8% contraction rate previously estimated.
Before the pandemic hit, the world’s third-largest economy was downturned. As precautions have been taken to contain the COVID-19 infection, its recovery has been intermittent.
Problems in the supply chain, especially computer chips used in cars, have also caused losses.
The last large-scale coronavirus outbreak in Japan that broke out in late summer has now subsided, and the number of cases has dropped sharply. But it has been hit during the usually busy summer tourist season, and calls to restrict business activities and travel have harmed restaurants, hotels, and other service industries.
Norihiro Yamaguchi of the Oxford Economics Institute said that consumer spending is recovering and may promote the recovery this quarter.
The latest data show that personal inventory levels are lower than previously reported, and weak government and consumer spending. It also showed that wages contracted by 0.4% instead of the 0.1% increase said earlier.
The Japanese cabinet approved a record 56 trillion yen stimulus package, including cash distribution and assistance to troubled companies, to help the economy get out of the downturn worsened by the coronavirus pandemic. The plan should receive approval from Parliament this month.
