Japan Q3, FY22 Growth Seen Weaker As Global Economy Slows Down

Japan’s economy is likely to grow at a slower pace than previously thought throughout the rest of the fiscal year, a Reuters poll showed, as growing risks of a global economic slowdown and supply woes torment Japanese exporters.

Manufacturers in the world’s third-largest economy are susceptible to the gloomier growth outlook in major trading partners such as the United States and China that are stoking recession and stagflation fears worldwide.

Analysts, however, still projected Japan’s growth to stay positive throughout the fiscal year until next March, the poll showed, thanks to an expected recovery of consumption, which accounts for over half of the country’s gross domestic product.

The economy was projected to expand an annualised 3.1 per cent this quarter, the median forecast of 36 economists in the July 4-15 poll showed, lower than 3.5 per cent estimated in a June survey.

Economists in the poll downgraded growth estimates for the October-December and January-March quarters slightly as well, while cutting those for last quarter even sharper, to 3.2 per cent from June’s 4.1 per cent.

“The biggest factor behind the overall downgrade is the growing sense of a slowdown in the U.S. economy,” said Harumi Taguchi, principal economist at S&P Global Market Intelligence.

China’s zero-coronavirus policy could also prolong supply bottlenecks for Japanese exporters, she said.

Japan’s export-oriented manufacturers have been hit hard by a relentless rise in commodity prices after Russia’s invasion of Ukraine and COVID-19 lockdown measures in Chinese plants this year.

Analysts in the poll expected Japan’s industrial production to have contracted 3.8 per cent in April-June from a year earlier, which will be followed by a meagre 2.2 per cent recovery of output in July-September.

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