By: DailyForex.com
Initial readings of Japan’s Q3 growth suggested that the world’s third largest economy had contracted by an annualised rate of 0.8%. The economy shrank by 1.2% in Q2 on the basis of the original data, so the nation was in recession which is defined as being two consecutive quarters of contraction. However, initial readings are based on a partial set of the economic data and are subject to two further estimates, based on more comprehensive data as it becomes available.
The most recent data from Japan suggests that the nation avoided a recession in the third quarter. The new data suggests that the economy actually expanded by 0.3% (over Q2) rather than the initial observation of a 0.2% quarter-on-quarter decline. The revised figure suggests than annualised growth should come in at 1%. Furthermore, the Q2 figure has also been adjusted upwards to show that the contraction was less severe than initially thought. The revised data puts the contraction at 0.1% (over Q1) rather than the 0.2% decline originally estimated.
The Q3 revision has been attributed to an under-estimation of business investment which came in at an expansion of 0.6% rather than the contraction of 1.3% which had originally been reported and the drawdown on inventories was less pronounced than originally thought. Domestic demand actually strengthened by 0.1% rather than the initial projection of a 0.3% decline. However, private consumption was weaker than thought, coming in at 0.4% rather than 0.5%.