"There are already signs that exports and capital expenditure are recovering, so I am not pessimistic about the outlook. Economic growth should start accelerating again in the fourth quarter as domestic demand strengthens before the sales tax increase."
- Yasuo Yamamoto, senior economist at Mizuho Research Institute
The Japanese Yen dropped further versus the greenback, hitting 103.22 on Monday after official data showed the Japanese economy slowed more than initially was expected in the quarter, while the current account turned into deficit. Rapid reform policies and unprecedented stimulus saw the world's third largest economy punching above its weight in the first two quarters, the nation's GDP decelerated to 0.3% in the three months to September, following a 0.9% expansion in Q2. This puts year-on-year growth at 1.1%, far lower than the 1.9% reported earlier.
Meanwhile, the current account surprisingly fell into first deficit since January, and the biggest in comparable data back to 1985. The seasonally adjusted trade gap stood at 593 billion yen in October, as the value of imported goods and services soared to a record high.
The fact that business spending remained unchanged in the third quarter is suggesting that even despite all efforts from the government and the central bank, companies are not committed to investment. On the back of disappointing data a former BoJ official said the Yen will rocket to 100 per buck in the first half of 2014, as Kuroda will not be able to expand the monetary base by enough to repeat this year's success.
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