TOKYO: Japan’s economy shrank faster than initially thought in July-September, due to a slump in consumption reflecting the COVID-19 fallout, a revised government report showed Wednesday.

The country’s seasonally adjusted gross domestic product in the second quarter of fiscal 2021 fell a revised 0.9 percent from the preceding quarter in price-adjusted real terms, worse than the preliminary reading of a 0.8 percent drop, the Cabinet Office said.

At an annual rate, the real GDP was down 3.6 percent, weaker than the 3.0 percent decline announced by the government agency last month.

The downward revision came as the size of decline in personal consumption, a major GDP component, was expanded following a review of the statistical method to remove seasonal factors linked to the novel coronavirus pandemic.

All major GDP components, also including exports, performed poorly, hit hard by this summer’s explosive spread of the novel coronavirus and deep cuts in automobile production blamed on supply chain disruptions caused by the pandemic.

With Japan seeing a marked decrease in new COVID-19 cases recently, the country’s economy appears to be recovering in the current quarter. But uncertainty remains due to the emergence of the omicron variant of the coronavirus.

Commenting on the revised data, Chief Cabinet Secretary Hirokazu Matsuno said, “As economic and social activities return to normal, our country’s economy is expected to pick up thanks to the effects of various policy measures and improvements in overseas economies.”

The top government spokesman also said, “We need to keep a close watch on downside risks stemming from supply side constraints and movements of materials prices, as well as on impacts on the domestic and overseas economies from the emergence of the new variant of the novel coronavirus.”

Personal spending fell a revised 1.3 percent in July-September, against the 1.1 percent decrease in the preliminary report. The downward revision partly reflected a drop in spending on automobiles and other durables due to supply shortages.

Capital spending went down a revised 2.3 percent, against the preliminary drop of 3.8 percent, and exports fell a revised 0.9 percent, against the 2.1 percent decrease reported last month.

According to the revised data, Japan’s real GDP in July-September came to 532 trillion yen on an annualized basis.

It seems difficult for the government to achieve its goal of bringing by year-end the nation’s GDP back to levels around 543 trillion yen, marked in October-December 2019, before the pandemic.

In nominal terms, Japan’s July-September GDP slid a revised 1.0 percent, against the preliminary reading of a 0.6 percent fall. At an annual rate, the nominal GDP was down a revised 4.1 percent, compared with the preliminary decrease of 2.5 percent.

The government also announced revised GDP data for fiscal 2020, which ended in March this year.

The country’s GDP fell a real 4.5 percent in the year due to the COVID-19 fallout, posting the sharpest contraction in the postwar period. The previous worst reading was a fall of 3.6 percent marked in fiscal 2008 amid the global financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers.

In nominal terms, Japan’s GDP shrank 3.9 percent in fiscal 2020.

JIJI Press