According to a first government estimate, the GDP of the world’s fourth largest economy grew by 0.2% in the third quarter of 2024. A clear slowdown after growth of 0.5% in the second quarter.
Japan saw its economic growth slow significantly in the third quarter, while a typhoon, a “megaseism” alert and still fragile consumption weighed on activity – enough to encourage the new Prime Minister to strengthen his recovery measures .
According to a first government estimate published on Friday, the gross domestic product (GDP) of the world’s fourth economy grew by 0.2% in the third quarter of 2024 (July-September) compared to the second, in line with the expectations of analysts surveyed by Bloomberg.
A clear slowdown after growth of 0.5% in the second quarter (revised figure). Compared to the same quarter of last year, GDP grew by 0.3%, much less than expected by the market (+0.6%) and well below the +1.3% recorded at the same period in 2023.
Private consumption, which had weighed down during the first six months of the year, certainly experienced an improvement during the summer (+0.9% in quarterly growth), notably thanks to temporary tax cuts, salary increases and , above all, the recovery of automobile sales.
“Manufacturers have restarted their production” after the certification test fraud scandals which affected the sector in the spring, underlines Marcel Thieliant, of the Capital Economics firm.
But “consumption has been affected by natural disasters” and remains fragile, warns Ryutaro Kono, economist at BNP Paribas.
Thus, the extent of the recovery was limited by the powerful typhoon Shanshan which hit the archipelago at the end of August, forcing the suspension of factory activity and the interruption of air and rail traffic.
And an exceptional “mega-earthquake” alert, issued for a week by the meteorological agency in August after a violent tremor, also “weakened tourist demand” with multiple trip cancellations, adds Mr. Kono.
“Political uncertainty”
The jump in quarterly private consumption “comes after a cumulative drop of 2% over the previous four quarters, it would be premature to pop the champagne,” concludes Stefan Angrick, analyst at Moody’s Analytics.
The picture remains gloomy: private and public investments have decreased slightly, net exports are sinking.
And the inflationary shock persists: the archipelago, after having suffered almost non-existent inflation for decades, has for two and a half years experienced an increase in consumer prices equal to or exceeding 2%, in particular due to a weakened yen which is becoming more expensive. imported products.
This is not expected to change immediately, with the dollar soaring following the election of Donald Trump.
“Wage increases continue, but not enough to keep up with inflation, which weighs on household finances” and their consumption, while the gloomy global economy should penalize Japanese exports, insists Mr. Angrick.
The return of the very protectionist Mr. Trump “augurs a tumultuous period for world trade,” he adds, also noting the “political uncertainty” in Japan itself.
Prime Minister Shigeru Ishiba (PLD), in office since the beginning of October, no longer has a majority in Parliament since a severe failure during early legislative elections that he had provoked, but was reappointed this week at the head of a government minority.
It aims to launch measures to support activity, projects suspended from the support of possible allied parties.
Household aid
“Our country is at an important crossroads, in transition to an economy based on growth, driven by wage increases and investments,” government spokesperson Yoshimasa Hayashi assured Friday.
“To achieve this (…) a set of measures is currently being studied,” he said, anticipating “a gradual (economic) recovery.”
Mr. Ishiba notably promised to support low-income households and those raising children, to whom he plans to directly distribute aid packages according to the Japanese media.
Above all, he wishes to revitalize rural regions by exploiting “their long-ignored potential to serve as a catalyst” and bring the archipelago out of “stagnation”.
Mr. Ishiba is preparing a “supplementary budget” to incorporate necessary public spending and plans a plan for massive subsidies to the artificial intelligence and semiconductor sectors.
The Bank of Japan (BoJ) has undertaken to cautiously raise its rates this year, which have long remained historically low: according to analysts, the institution could raise them again in December, in particular to halt the continued slide of the yen, in the face of stubborn inflation .
“The BoJ will be encouraged by the strengthening of consumer spending” in the third quarter, judges Mr. Thieliant.
