Cloudy Economic Outlook for Japan

Economists may have to lower their expected GDP growth of Japan for the rest of the year as a result of their core machinery orders taking a deeper plunge than expected.  Despite a 7.3% rise in the July-September period, the core machinery orders, which is used as an indicator of capital spending six to nine months ahead, saw a 3.3% fall in September, which greatly exceeds the expected 0.8% decline set by economists.  What adds even more gloom to Japan’s GDP outlook is the fact that the decrease in September follows a 2.2% decrease that came in August and companies surveyed by the Cabinet Office predicted that core orders will continue to fall another 5.9% in the October-December quarter. One would not want capital expenditure to have a negative impact on GDP of the world’s third biggest economy.  Takeshi Minami, who's a chief economist at Norinchukin Research Institute sees these discouraging numbers as temporary and not as big an issue as others stating, “The negative 5.9% outlook (for Oct-Dec) isn’t as big a decline as the number makes it seem.”  Given the decrease in demand both domestically and internationally as well as a postponement of reaching its 2% inflation rate, Takeshi may have to carry a sense of worry and lower his outlook like most other economist.