The Japanese Economy Declines as Exports Face Impact by US Tariffs
The Japanese economic system has experienced a decline for the initial time in a year and a half, mainly caused by falling exports as a result of recent US tariffs.
Group of Seven Growth Rankings
The Japanese economy stands as the initial G7 country to disclose an GDP decline in the most recent three-month period.
With the United States still needing to release its GDP figures for the third quarter, the present G7 growth standings display:
- France: +0.5% quarterly growth
- UK: +0.1%
- Canada: +0.1% (preliminary figure)
- Germany: 0%
- Italy: 0%
- Japanese economy: negative 0.4 percent
Travel Stocks Decline amid Diplomatic Rift with Beijing
Alongside the GDP decline, Japan is experiencing an growing political conflict with China concerning Taiwan.
Stocks in Japan's travel and retail firms have dropped sharply after China recommended its nationals to avoid visiting to Japan.
This action by Beijing heightened a political dispute that was triggered by remarks from Japan's new prime minister about the potential of sending forces in the case of a potential Chinese attack on Taiwan.
The development led to a surge of sell-offs across Japanese leisure shares.
- The Tokyo Disneyland operator shares fell by 5.7 percent
- The department store chain tumbled by 11.3 percent
- The national carrier fell by 3.75 percent
"The China-Japan dispute over Taiwan and Beijing's advisory advising against travel to Japan introduces short-term challenges for consumer-facing sectors.
"Chinese visitors account for roughly 25 percent of Japan's international visitors, making retail outlets, high-end shopping, and tourism services especially vulnerable."
GDP Contraction Details
Japan's gross domestic product dropped by 0.4 percent in the third quarter, as industrial overseas shipments were affected by tariffs levied by the United States recently.
Overseas shipments were a key factor of the decline, falling by 1.2% compared with the April-June quarter, and were 4.5% lower than a the same period last year.
Earlier this year, the American government had threatened Japan with a new 25 percent tariff on its goods, which was later reduced to 15 percent when the two nations reached a trade agreement.
Private demand also fell, by 0.3 percent quarter-on-quarter.
On an annualized basis, Japan's GDP shrank by 1.8 percent in the three months through September.
"Japan's economy was strong in the initial six months of this year and today's GDP data showed that growth is halted for now.
I anticipate Japan's economy to be returning on a moderate growth trend going forward."
The White House has lately acknowledged the effect of tariffs on Americans, lowering duties on imported food products including beef, tomatoes, beverages and bananas amid increasing concerns about increasing costs.
Economic Agenda
- 8am GMT: Switzerland GDP report for Q3
- 3pm GMT: US construction spending data for August
