Although Japan is still recording growth, when it comes to the nation’s retail sales the rise in September was lower than forecast and hints at the economic issues currently weighing on the world’s third largest economy. From August sales plummeted by 3.6 per cent, the most significant monthly decline for 18 months.
The ongoing territorial dispute with China and the expiry of government subsidies for car purchases took a toll on consumer demand. Consequently September’s retail sales figure was 1.3 per cent lower than Augusts’ revised 1.7 per cent.
Although economists participating in a Bloomberg survey foresaw a rise of 1 per cent the Trade Ministry revealed an increase of just 0.4 per cent.
Cars are one of Japan’s key exports but this report showed a whopping 13.9 per cent decline in domestic sales in September. Two of the country’s main motor vehicle companies, Honda and Toyota Motor Corp, have recorded particularly concerning plunges in sales of 40 and 49 per cent respectively.
This report is the latest in a line indicating that contraction could be on the cards for Japan before the end of 2012.
With the scope for exports dampened by the global economic slowdown bolstering the economy through fiscal stimulus has become necessary. Although the Japanese government has already revealed its intention of injecting the nation’s economy with 750 billion yen it is generally expected that more stimulus will have to be settled on in the near future.
An economist with Tokyo based BNP Paribas SA pessimistically commented: ‘There are no positive signs in Japan’s economy […] the economy will probably contract for two consecutive quarters through the end of next year.’
As of 10:10 am
The Pound to Euro exchange rate is currently trading at 1.2436
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The Euro to US Dollar exchange rate is currently trading at 1.2907
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