Warning of super earthquake slowing Japan's economic growth

Japan's economy slowed in the third quarter of 2024 as warnings of a possible mega-earthquake weighed on economic performance, official data showed on November 15.

The figures come as Prime Minister Shigeru Ishiba seeks to boost the world's fourth-largest economy.

The report said the warning of a mega-earthquake in August and the aftermath of Typhoon Shanshan - one of the most powerful storms in decades - caused Japan's gross domestic product (GDP) in the third quarter to grow by just 0.2% compared to the same period last year.

The figure met market expectations but the growth slowed from the 0.5% recorded in the previous quarter.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi said the government hopes to gradually recover the economy after years of stagnation and deflation through economic and fiscal policies. Japan is also considering an economic stimulus package, Hayashi said.

Previously, after a 7.1 magnitude earthquake shook southwestern Japan on August 8, the Japan Meteorological Agency (JMA) issued a warning for the first time in decades about the risk of a super earthquake around the Nankai Trench, an underground trench that runs along the Pacific coast.

According to the agency, in the worst case scenario, the super earthquake could shake a large area from Kanto to Kyushu, causing tsunamis that engulf coastal areas from Kanto to Okinawa and the death toll could reach 323,000 people.

This warning has seriously affected production, business and tourism activities in this country.

Meanwhile, typhoon Shanshan disrupted production and severely affected rail and air traffic.

Stefan Angrick, an economist at Moody's Analytics, called the challenges facing Japan "significant," especially as the United States prepares for a new White House with uncertain prospects for global trade.

Mr Angrick said that while wage growth in Japan has improved, it has not been strong enough to keep up with inflation, putting financial strain on households. In addition, weak external demand and domestic production problems will put pressure on exports.

Meanwhile, the yen's continued slide against the dollar could force the Bank of Japan to raise interest rates before the end of the year despite less-than-optimistic data.