Japan’s 3Q23 GDP was revised downward to a 0.7% fall quarter-on-quarter (QoQ), and 2.9% contraction year-on-year (YoY0, which saw a sharper fall compared with the preliminary 0.5% decline QoQ and 2.1% fall YoY.
The drop was primarily due to a shrinkage in consumer and business spending in the quarter. Meanwhile, real wages and household spending kept falling in October amid persistent inflation.
During the quarter, capital expenditure fell 0.4%, which compared with a preliminary 0.6% decline, while a median market forecast for a 0.5% fall.
Official data showed that inflation-adjusted real wages dropped 2.3% year-on-year in October, marking its 9th straight month of decline. Still, it is higher than the target rate of 2% by the Bank of Japan as the central bank stressed it needs to maintain ultra-low policy rates until it sees a sustainable inflation of 2% along with rising wages.
The Japanese yen continued to strengthen early Friday by nearly 1% against the US dollar as expectations are growing in the foreign exchange market for BOJ to finally give a signal that it will soon relax the ultra-low interest rates policy at the meeting scheduled next week.
Kazuo Ueda, BOJ Governor, noted that once the central bank pulls short-term borrowing costs out of negative territory, it will give several options on the monetary policy.