Japan’s Q3 GDP at 0.30%: What That Means for the Economy
Japan’s Q3 GDP
According to the report provided by the Cabinet Office of Japan, Japan’s GDP growth in 3Q16 was 0.30% compared to 0.50% in 2Q16. It was below the preliminary estimate of a 0.50% growth.
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Japan’s third-quarter GDP showed weak improvement. The domestic demand was flat in the quarter. Net trade flows also contributed less to Japan’s (EWJ) (DXJ) economic growth, and a stronger yen (FXY) hampered export growth.
Impact on the economy
Recently, we saw that Japan’s manufacturing PMI (Purchasing Managers’ Index) recovered from its contraction zone. In October and November 2016, the manufacturing PMI showed stronger movement. Export orders from outside the country (VTI) (ACWI) and domestic demand improved, which signaled that fourth-quarter economic growth may result in some impressive numbers.
The Bank of Japan (or BoJ) has taken various steps to handle the economy from a deflationary and low-growth situation. Recently, the BoJ announced that it would buy ten-year Japanese government bonds so the yield could stay at about 0.00%. It said it would keep an eye on short-term rates. The deposit rate was left unchanged at -0.10%.
If the central bank’s new policy framework supports growth in the economy, we may see a change in Japan’s economic condition.
In the next part, we’ll take a look at improving US consumer sentiment and whether it could indicate better economic conditions.