Japan's economy shrank less in July-Sept, revised data show

TOKYO (AP) — Japan’s economy contracted less than previously thought in the last quarter, weathering the country's latest big COVID wave with less damage than had been thought.

The Cabinet Office reported Thursday that the economy shrank at a 0.8% annual rate in July-September. That was better than minus 1.2% annual growth reported earlier.

In quarterly terms, the world's third-largest economy contracted 0.2% instead of 0.3%.

Pandemic precautions eased in the late summer, allowing normal business activity and travel to resume after many months of on-again, off-again limits. Exports also were stronger than earlier thought, expanding 2.1% in annual terms, up from the earlier estimate of 1.9%.

Growth in the last fiscal year, which ended in March, also was revised upward to an annual 2.5% pace from 2.3%. The new data also showed corporate investment rose more than reported earlier.

The economy has picked up steam in the current quarter, as border controls were eased to allow foreign tourists to enter the country. But subdued demand from China and slowing growth in other major markets as central banks raise interest rates to counter inflation are expected to limit the pace of recovery.

Decades-high inflation poses another threat, undermining purchasing power and raising costs for both businesses and consumers in a country that depends heavily on imports. With the economy still in the doldrums, the Bank of Japan has shied away from the interest rate hikes being used to slow growth and relieve price pressures in the U.S. and elsewhere. That has weakened the Japanese yen versus the U.S. dollars, compounding the impact of higher costs for oil, gas and other commodities.