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Japan heavy rains to shave up to 0.6 pct points from third quarter GDP - government

Published 01/10/2014, 11:34
Updated 01/10/2014, 11:40
© Reuters High-rise buildings are seen during sunset in Tokyo

TOKYO (Reuters) - Japan's Cabinet Office issued estimates on Wednesday showing heavy rains and unusually cool weather this summer have shaved anywhere from 0.2 to 0.6 percentage points from third-quarter gross domestic product growth.

Bad weather also caused consumer spending to fall somewhere between 200 billion yen and 700 billion yen ($1.8 billion to $6.4 billion), the estimates showed. That has trimmed anywhere between 0.3 to 1 percentage points from third-quarter private consumption, which accounts for roughly 60 percent of GDP.

"Heavy rain has curbed the number of customers at restaurants and convenience stores. Sales of household appliances such as air-conditioners and beverages have been slack due to low temperature," a Cabinet Office official said.

"The weather had a certain impact on private consumption, which is stalling. But a moderate economic recovery is continuing, backed by an improving labour market and rising wages."

The estimates were made based on comparison with average GDP figures in the past, he added.

Heavy rain has probably pushed the GDP down by 1.6 percentage points on an annualised basis in July-September, Economics Minister Akira Amari said on Tuesday.

Prime Minister Shinzo Abe will use the July-September economic data to decide whether to raise sales tax again next year, a decision increasingly complicated by a weak recovery.

Japan's economy suffered the deepest slump since 2009 in the second quarter after the first sales tax under Abe's government took a heavy toll on consumption. There are concerns the economy may not rebound strongly in the July-September quarter.

Government officials have repeatedly said heavy rain storms is one reason consumer spending has disappointed for much of this year, but some economists worry that declines in real wages are the bigger factor behind weak consumption.

© Reuters. High-rise buildings are seen during sunset in Tokyo

Cabinet Office officials presented the estimates at a meeting of the government's top economic advisory panel.

(Reporting by Stanley White and Tetsushi Kajimoto; Editing by Shri Navaratnam and Prateek Chatterjee)

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