|09-08-2014, 02:52 PM||#1|
Japan GDP shrinks more than estimates in Q2
The Japanese economy contracted more than estimates in the second quarter of 2014, after household spending dropped and manufacturing activity weakened as a result of raising sales tax to 8% from 5%.
The final reading of Japan`s Gross Domestic Product (GDP) showed the economy shrank 1.8% in the second quarter of 2014 compared with a previous contraction by 1.7%, and the reading met analysts` estimates.
On the yearly record, the GDP contracted 7.1% in the quarter ended June, following a contraction by 6.8%, and the reading came worse than median estimates that referred to a 7.0% contraction.
Moreover, Prime Minister Shinzo Abe signaled last week that his government is preparing a new stimulus package to be pumped into Japan`s financial system to help in supporting the economy before a new sales tax hike take place in 2015 from 8% to 10%.
Another challenge added to Premier Abe is having companies` capital investment falling 5.1% in the second quarter, while analysts expected a drop by 2.5% only. Private consumption slid 5.1%, after it declined a previous 5%.
Data released today also showed that Japan`s trade balance recorded a deficit of 828.1 billion yen in July compared with a previous deficit of 537.1 billion yen, and analysts` expected a deficit of 725.9 billion yen. The released data is reflecting a continuous drop in the nation`s exports that was also hit by weak global demand.
Finally, we can say that Premier Abe is struggling to create a sustained recovery through adding more stimulus measures to the market in cooperation with the Bank of Japan that also aims at pushing inflation towards 2% to put an end for deflation risks that threatened Japan for years.
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