According to the latest Reuters economic survey, Japan’s economic performance in the third quarter may show a clear trend of slowing growth, mainly due to the dual constraints of weak personal consumption and declining corporate investment willingness. This development trend may bring new challenges to the Bank of Japan’s monetary policy adjustments. Economists’ forecast data show that after adjusting for inflation, Japan’s GDP in the third quarter of this year (July-September) is expected to grow at an annualized rate of only 0.7%, a significant drop from the 2.9% growth rate in the second quarter.
As the main driving force of Japan’s economy, the performance of personal consumption expenditure is worrying. This key indicator, which accounts for more than 50% of GDP, is expected to achieve only a weak growth of 0.2%, in sharp contrast to the growth rate of 0.9% in the previous quarter. In this regard, the research team of SMBC Nikko Securities pointed out in its latest report: “The current economic recovery process has not yet been fully consolidated.”
In terms of corporate investment, the situation is also not optimistic. Survey data shows that after recording a positive growth of 0.8% in the second quarter, capital expenditure in the third quarter is expected to turn negative, with a decline of about 0.2%. The Japanese government plans to release preliminary GDP statistics for the third quarter at 8:50 a.m. on November 15 (Friday).
It is worth noting that the Bank of Japan maintained its current low interest rate policy at its most recent monetary policy meeting. However, the bank also pointed out that the downside risks facing the US economy have eased, which seems to suggest that the possibility of future rate hikes is increasing. However, if domestic consumption and global demand continue to be sluggish, the Bank of Japan may need to reassess the pace and timing of its exit from its decade-long loose monetary policy.
