Japan GDP Tumbles After Biggest CapEx Collapse Since Financial Crisis

In a world where economic growth is rapidly slowing down, and in many case contracting outright, the latest news out of Japan will hardly boost confidence that an economic recovery is just around the corner.

Moments ago Japan's Cabinet Office reported that the already contracting Q3 GDP was far worse than initially estimated, printing at -2.5% Q/Q annualized, below the -2.0% expected, and more than twice as bad as the original estimate of -1.2%. On a sequential basis, nominal GDP declined 0.7%, below the 0.5% consensus estimate.

While private consumption declined -0.2% Q/Q, slightly worse than the -0.1% expected...

...it was business spending that tumbled, plunging -2.8%, far worse than the -0.2% initial estimate, and worse than the -1.8% consensus estimate.  It was also the biggest QoQ drop in business spending since the financial crisis.

The capex slump was triggered by a series of typhoons that disrupted supply chains and a quake that knocked out power in northern Japan. Still, economists expect the impact of those one-time factors will fade, and growth should rebound in 4Q, with October industrial output data suggesting the economy rode out the 3Q bumps. Then again, it is also possible that Japan's economy has been gripped by the broader contraction resulting from the trade war between the US and China.

Whether Q4 GDP prints green, or Japan enters a technical recession, Bloomberg economists admit that further out a mild slowdown in Japan's growth is expected next year, just as the BOJ is forced to taper its QE even more.

And with Japan's GDP declining even more, this means that under the "independent" eye of Kuroda, and the watchful eye (and lower colon) of Abe, The Bank of Japan's balance sheet (553.6 trillion yen as on November 10th ) is now even larger than Japan’s annualized nominal seasonally-adjusted GDP.

Meanwhile, Japan's GDP contraction is only the latest to hit developed countries around the globe in recent weeks, from Sweden...

... to Italy...

... to Germany...

... all the way to Switzerland...

... and it is only a matter of time before the US itself follows into the red.