The war arrives in Japan: GDP decline, despite the Yen on the ground
Japan "enters the war", or rather, its economy begins to suffer heavily from the effects of the conflict in Ukraine, with the IPL contracting, despite expectations. Preliminary data shows that the Japanese economy shrank 0.2% quarterly in the first quarter of 2022, compared with the market consensus of a 0.4% decline and after revised 0.9% growth at decline in the fourth quarter. This was the second contraction in the last three quarters, between a resurgence of COVID-19 cases and multiple headwinds from abroad. Household consumption decreased for the second time in three quarters by 0.1% (vs.2.5% in the fourth quarter) and public investments decreased for the fifth consecutive quarter (-3.6% vs -4.7 %). At the same time, net external demand contributed negatively to GDP, as exports increased by 1.1% (versus 0.9% in the fourth quarter) while imports grew faster by 3.4% ( against 0.3%). Meanwhile, business investment grew for the second consecutive quarter (0.5% vs 0.4%) while public spending rebounded (0.6% vs -0.3%)
So:
- families are afraid and save;
- exports are pulling less due to the Ukrainian crisis and the lockdown in China, with a drop in exports;
- the government, afraid of imported inflation, tries to spend less and makes fewer investments.
The decline in exports occurred despite the yen having devalued powerfully against the dollar in recent months:
Probably this devaluation refocused export flows to the USA, the big world buyers, for now, but it was not enough to compensate for the other negative moves. With Europe in crisis, Russia at war and China in Lockdown, Tokyo lacked internal serenity and markets where to place industrial products.
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The article The war arrives in Japan: GDP decline, despite the yen on the ground comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-guerra-arriva-in-giappone-calo-del-pil-nonostante-lo-yen-a-terra/ on Wed, 18 May 2022 10:00:14 +0000.