Japan's Economy Declines as Exports Suffer by US Tariffs
The Japanese economic system has shown a decline for the initial time in a year and a half, mainly caused by falling overseas shipments because of newly imposed US trade duties.
Group of Seven Economic Leaderboard
The Japanese economy stands as the first G7 economy to announce an output shrinkage in the latest three-month period.
With the US yet to publish its gross domestic product figures for the third quarter, the current Group of Seven economic standings display:
- France: +0.5% expansion
- United Kingdom: 0.1 percent
- Canada: +0.1% (preliminary figure)
- Germany: 0%
- Italy: 0%
- Japan: negative 0.4 percent
Travel Stocks Slump during Political Dispute with Beijing
Alongside the GDP decline, Japan is dealing with an growing diplomatic tension with China regarding Taiwan.
Shares in Japanese travel and consumer businesses have dropped noticeably after China recommended its residents to refrain from visiting to Japan.
This move by Beijing heightened a political dispute that was triggered by remarks from Tokyo's new PM about the possibility of deploying troops in the case of a potential Chinese attack on Taiwan.
The situation caused a wave of selling across Japan's tourism-related shares.
- Oriental Land shares dropped by 5.7 percent
- Isetan Mitsukoshi plummeted by 11.3 percent
- The national carrier declined by 3.75%
"The China-Japan dispute over Taiwan and Beijing's advisory advising against travel to Japan introduces short-term difficulties for consumer-facing sectors.
"Tourists from China account for roughly 25 percent of Japan's international visitors, making retail outlets, luxury retail, and hospitality particularly vulnerable."
GDP Decline Details
Japanese GDP declined by 0.4% in the July-September quarter, as manufacturers' overseas shipments were affected by duties levied by the United States this year.
Overseas shipments were a primary factor of the decline, falling by 1.2% compared with the previous quarter, and were 4.5 percent lower than a year ago.
Earlier this year, the American government had threatened Japan with a new 25 percent tariff on its goods, which was later reduced to 15 percent when the two countries concluded a trade deal.
Consumer spending also fell, by 0.3 percent quarter-on-quarter.
On an annual basis, Japan's real gross domestic product shrank by 1.8% in the quarter through September.
"The Japanese economic situation was strong in the first half of this year and the latest GDP figures showed that momentum is halted temporarily.
I expect Japan's economy to be back on a gradual growth trend going forward."
The White House has lately recognized the impact of tariffs on Americans, lowering tariffs on food imports including beef, produce, coffee and fruits amid increasing concerns about increasing costs.
Economic Calendar
- 08:00 Greenwich Mean Time: Switzerland GDP report for Q3
- 3pm GMT: US construction spending data for August
