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Japanese economy narrows 3%, faster than expected

The Japanese economy contracted 3% year-on-year in the third quarter — transgressing the expected figure of 0.8%, data on Monday showed.

The country’s gross domestic product (GDP) also shrank by 0.8% quarter-on-quarter amid COVID-19 restrictions and global chip supply shortages, Japan’s Kyodo News reported.

The island nation’s GDP was 534.71 trillion yen ($4.7 trillion) in the third quarter of this year.

The GDP grew by 1.5% in the second quarter, but dropped 4.1% year-on-year in the first quarter.

During the July-September period, private consumption decreased as the 2020 Olympics held behind closed doors due to the pandemic failed to contribute to spending figures.

The slowdown in automobile production due to the global chip crisis caused Japanese household spending on cars to worsen.

The narrowed production also impacted business investments negatively.

While imports declined by 2.7%, government expenses posted an increase of 1.1%.

Yoshiki Shinke, chief economist at Tokyo-based Dai-ichi Life Research Institute, said: “We should think the actual state of the economy was worse than the figures.

“Let’s say government spending and imports surely pushed up GDP, but the reasons are not positive.”

The government’s estimate for the last quarter of 2021 was the country’s economy return to the pre-pandemic level of 546.96 trillion yen (some $5 trillion) in the last quarter of 2019.

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