BoJ monetary policy hint boosts the yen
Japan's economy fell faster than first estimated in the third quarter with final estimates released overnight showing that consumer and business spending both shrank, driving down third quarter gross domestic product.
The Japanese economy lost an annualised 2.9%, markets had forecast a 2% decline. IGTV’s Angela Barnes looks at how it impacted the JPY.
(AI Video Transcript)
The Japanese economy
The Japanese economy had a bigger decline than people originally thought in the third quarter. Both consumers and businesses spent less money, causing the country's gross domestic product (GDP) to fall by 2.9%. This was worse than the expected 2% decline. Business spending also went down by 0.4% and consumer spending, which makes up a big part of the economy, went down by 0.2% between July and September.
The Japanese inflation rate
Even though salaries went up by 1.5%, the high inflation rate made it so that people's wages didn't actually go up in real terms. In fact, the inflation-adjusted wages actually decreased by 2.3% in October compared to the previous year, making it the 19th month in a row of declining real wages. This decrease in wages meant that people had less money to spend, and household spending went down by 2.5% in the same month. This decline in household spending has been happening for eight months in a row.
Because of all this, it's expected that household spending will continue to go down in the future, which is a big problem for the Japanese economy. Even though salaries are going up a little bit, the high inflation rate means that people can't buy as much as before. This means that people are spending less, which hurts the economy even more. All of these problems with spending by consumers and businesses show that the Japanese economy is having a hard time.
People in charge of making decisions for the country and experts will have to keep an eye on all of this and come up with ways to make people want to spend more money and help the economy grow. They also have to find ways to make sure that salaries go up at the same rate as the cost of things, so that people's wages don't feel smaller even if they go up a little bit. This will help people have a better life and feel more confident in spending money.
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