Annualized contraction figures were higher than the preliminary readings
Even though the economies are resuming
their activity, the latest reports keep on showing the negative impact the #pandemic
had.
The Japanese Cabinet Office report read
that the country’s GDP
contracted slightly more than estimated. For the quarter that ended in June,
official data showed a 7.9% contraction. The Cabinet was looking for 7.8%. However,
the numbers came below the market consensus of 8%.
These figures mark the deepest contraction
that the third-largest economy in the world reported in modern history. The
shrinkage would have been far worse if the central bank hadn’t eased its policy
twice this year and didn’t conceive the $2 trillion #stimulus package.
The downward revision was caused by a 4.7%
drop in capital expenditure, higher than the 1.5% estimated, which suggested
that the pandemic hit multiple sectors of the economy.
On an annualized basis, the economy shrank
28.1%. The figures came in higher than the preliminary reading of 27.8%.
Economists are cautious when talking about
a recovery. They suggest that it will be modest, given that household spending
fell by more than 7.6% and the wages declined for the fifth consecutive month.
They forecast a 5.6% economic contraction for the current fiscal year, with a
3.3% recovery next year.
The country’s benchmark, Japan225 closed the
Asian trading session 0.8% higher. The USD/JPY pair is #trading
at 106.35.
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