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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

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.

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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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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