The Japanese economy dropped more than the expected figure in the third quarter because of natural and lesser imports which can be due to the escalating trade protectionism on offshore demand.
The decline in number indicates the increasing sign of weakness in the global market as we can see China and Europe losing its ground. Germany is anticipated to be released later in the day which also showed a decline in the previous quarter.
The government continues to see that the economy can recover moderately because of typhoons and earthquakes affecting production, as well as consumption. As an economist at Tokai Tokyo Research Center said, “The decline in exports cannot be attributed entirely to the natural disasters”. However, few analysts see that this can’t be because of just a single factor amid the decline in exports and sluggish Chinese demand and effects on increasing global trade friction.
The contraction of 1.2 percent in the July quarter for an annual basis, higher than the median estimate decline of 1.0 percent. Previously, it showed a solid growth of 3.0 percent, according to the reports on Wednesday.
Fall in exports was primarily due to the 1.8 percent, which was the largest drop over three years. The capital expenditure declined by 0.2 percent after its growth of 3.1 percent in April. This has been the first decline in two years based on the reports.
Analysts warn that recovery may be weaker than anticipated and could hamper growth next year when problems on trade conflict worsen.