TOKYO: Japan’s economic growth in the second quarter was much slower than seen in a stellar preliminary reading, government data showed on Friday, confounding hopes for a long awaited pick-up in domestic demand.
The downgrade was widely expected after data used to revise gross domestic product (GDP) figures showed capital spending growth in April-June slowed from the previous quarter.
While the disappointing data may weaken confidence in the government’s economic policies and the business outlook, analysts still expect the economy to sustain a steady recovery as robust global demand underpins exports and a tightening job market improves the prospects for higher wages. “It’s indeed a big revision, but growth in the economy and capital expenditure is still pretty fast,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“There’s no need to be pessimistic about Japan’s economy. Given strong corporate profits and improving business sentiment, capital expenditure will remain firm.”
Japan’s economy expanded at an annualised rate of 2.5 per cent in April-June, much less than an initial estimate of 4.0 per cent growth, Cabinet Office data showed. While it was lower than a median market forecast for a revision to 2.9 per cent growth, the economy still managed to post a sixth straight quarter of expansion.
Japan’s GDP data tends to experience big revisions due to the way the Cabinet Office estimates capital expenditure, consumption and inventory in the preliminary reading. The downgrade in annualised GDP growth, which was the biggest since comparable data became available in 2010, was largely due to a sharp markdown in corporate capital spending. — Reuters
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