Japan’s economy tumbles in the third quarter

Japan’s economy tumbles in the third quarter

In the third quarter, the Japanese economy went down more than anticipated, affected by natural disasters, to say nothing of a tumble in exports. That’s a worrying indication that trade protectionism is already impacting overseas demand.

It’s apparent that the contraction in the world's number three economy contributes to soaring signs of weakness worldwide, with the European bloc and China losing momentum. As for Germany, it’s anticipated to post later in the day that the German economy dived too the previous quarter.

The Japanese cabinet stuck to its view that the country’s economy keeps recovering modestly, blaming the contraction on natural disasters, which affected factories and also consumption.

However, some market experts told that such a situation with Japanese factors alone couldn’t explain the downturn, thus indicating worrying dives in exports in the face of decelerating Chinese demand as well as the fallout from the escalating global trade conflict.

The matter is that the Chinese economy is going down and it means that Japanese exports are going to be slow to revive and surge will stall around the first half of 2019, as some market analysts pointed out.

Moreover, the annualized 1.2% slip in July-September turned out to be bigger than a median forecast for a 1% sink and followed a firm 3% expansion in the previous quarter, as government data revealed.

The dive was powered mostly by a 1.8% decline in exports, which is the biggest sink for more than three years. Furthermore, capital expenditure that rallied by 3.1% in April-June, dived by 0.2%, marking the first tumble for two years.

Market experts warn that an expected rebound in the current quarter's surge could appear to be worse than initially foreseen and surge could stall in 2019, when the strains from trade clashes become more acute.

 

 

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Market updates on August 15

The risk sentiment remains under pressure after the comments by China about the countermeasures against the US tariffs. Thus, the AUD/USD and the USD/JPY pairs will be under our attention.

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