Analysts: Japan's economy contracted for the first time in six quarters, complicating the central bank's interest rate hike path.
TL;DR
Japan's economy contracted for the first time in six quarters, with GDP shrinking 0.4% quarterly and 1.8% annually. This may delay the Bank of Japan's interest rate hikes until next year, influenced by external demand and housing investment declines.
Tags
According to ChainCatcher, Japan's economy contracted for the first time in six quarters, further complicating the timeline for the Bank of Japan's next interest rate hike. Preliminary government data released Monday showed that Japan's real GDP shrank by 0.4% quarter-on-quarter in the third quarter, the first contraction since the first quarter of 2024, and contracted by 1.8% year-on-year. This economic weakness may support the view that the Bank of Japan will wait until next year to take any policy action.
Specifically, in the July-September quarter, external demand contributed to a 0.2 percentage point decrease in the country's GDP, reflecting the impact of the US tariff increases. Housing investment was another major drag, declining by 9.4% from the previous quarter. Nevertheless, economists believe this decline is due to temporary factors related to regulatory changes and expect the market to recover. (Jinshi)