As anticipated, Yoshihide Suga took office as Japan’s Prime Minister in September following the resignation of Shinzo Abe on the grounds of ill health. Mr Suga is widely expected to carry on with Mr Abe’s “Abenomics” policies.
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- Japan’s economy shrank by 28.1% YoY in Q2
- Japanese exports posted another double-digit decline
- Australia’s economy shrank by 7% in Q2
As anticipated, Yoshihide Suga took office as Japan’s Prime Minister in September following the resignation of Shinzo Abe on the grounds of ill health. Mr Suga is widely expected to carry on with Mr Abe’s “Abenomics” policies.
“Australia’s first recession for 28 years was confirmed during September”
Japan’s economy shrank by more than initially calculated during the three months to June. The country’s economy contracted by 28.1% year on year during the quarter, compared with an earlier estimate of -27.8%. Capital expenditure fell more steeply than originally calculated, dropping by 4.7% instead of by 1.5%.
Real wages fell for a fifth consecutive month during July, while household spending fell at an annualised rate of 7.6%. Japan’s exports posted a double-digit decline for a sixth consecutive month during August, posting an annualised drop of 14.8%. Activity was dragged down by a 21.3% decline in shipments to the US . Although exports to the rest of Asia fell by 7.8%, shipments to China increased at an annualized rate of 5.1%.
Over September, the Nikkei 225 Index rose by 0.2% while the Topix Index climbed by 0.5%. In contrast, the TSE Second Section Index – representing medium-sized companies – fell by 2.6%
Australia’s first recession for 28 years was confirmed during September: having contracted by 0.3% during the first quarter of 2020, the country’s economy shrank by 7% in the second quarter, driven by a sharp and “unprecedented” drop in household consumption; meanwhile, the household saving-to-income ratio rose to 19.8%, its highest levels since June 1974. Share prices in Australia fell to their lowest level since June during the month, and the ASX All Ordinaries Index ended September down by 3.8%
Bank lending to households rose sharply during August in South Korea, according to the country’s central bank, boosted by home mortgage lending and funds for stock investment. Policymakers at the Bank of Korea (BoK) expect South Korea’s economic growth to fall by -1.3% this year, compared with its May forecast of -0.2%, after which it is predicted to expand by 2.8% in 2021. Although export activity is likely to pick up, the recent resurgence of Covid-19 infections is forecast to put a brake on private consumption. Downside risks include a global and domestic “second wave” of infection, delays to the recovery of South Korea’s semiconductor industry, and increasing tensions between the US and China. The Kospi Index edged up by 0.1% over the month.
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