Japan's Economic Contraction Larger Than Initial Estimates

Deep News12-08

Revised data shows Japan's economy shrank more than initially estimated in the July-September quarter, marking the first contraction in six quarters. Economists attribute the third-quarter weakness largely to a temporary decline in residential investment due to regulatory changes.

Official data released Monday revealed that real GDP contracted at an annualized rate of 2.3% in Q3, compared to the preliminary estimate of a 1.8% decline. On a quarterly basis, the economy contracted by 0.6%.

These results are unlikely to alter the Bank of Japan's stance on seeking further interest rate hikes, as inflation remains elevated and trade-related uncertainties have eased. Market expectations for a December rate hike have strengthened over the past week after Governor Kazuo Ueda signaled the central bank would weigh the pros and cons of tightening at its upcoming policy meeting.

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