Yesterday economists were predicting that today’s GDP data for Japan would show that the Asian economy had emerged from recession, they got it wrong. Instead the Japanese economy shrank in the last quarter of 2012.
Japan’s GDP contracted by 0.4% as falling exports and a slump in business investment outweighed consumer consumption. Economists had been predicting growth of 0.4%. The decline adds weight to Japanese Prime Minister Shino Abe’s calls for further monetary stimulus to battle deflation and to boost exports.
Japanese exports fell for the seven months through to December as the Euro crisis dragged on shipments and a dispute with China over islands claimed by both nations dented demand for products such as Toyota Motor Corp’s cars. Net exports contributed 0.2 percentage point to the contraction, today’s report showed.
The latest GDP figures do not take into account the recent benefits of the weakened Yen.
“These are pre-Abe numbers,” said Takuji Okubo, chief economist at Japan Macro Advisors who formerly worked at Goldman Sachs Group Inc. “He was only prime minister for about the last week of the quarter. We will see a fairly big pick up this year, led by exports recovering on the weaker yen.”
Some Japanese businesses recently revealed that they have seen their earnings improve since the measures were implemented. Nintendo said that it doubled its annual net income and Panasonic Corp., reported an unexpected profit for the quarter.
Current JPY exchange rates
These exchange rates were correct as of 10:55 am
The Japanese Yen to Pound Sterling exchange rate is currently trading at 0.0068
The Japanese Yen to US Dollar exchange rate is currently trading at 0.0106
The Japanese Yen to Euro exchange rate is currently trading at 0.0080
The Japanese Yen to Australian Dollar exchange rate is currently trading at 0.0103