TOKYO – Japan slashed its estimate of economic growth for the July-September quarter Monday as investment by companies slowed more than first estimated.
The government said the world’s third-largest economy grew an annualized 1.1 per cent last quarter, less than half the pace of the previous quarter. The initial estimate had put growth at 1.9 per cent.
Prime Minister Shinzo Abe’s economic revival strategy for Japan centres on cheap credit, a weak yen and longer-term reforms to boost competitiveness, but corporate investment and personal incomes have yet to rebound. Meanwhile, exports have grown less than expected despite the weaker yen, partly due to slowing growth in many emerging economies.
Japan’s economy grew at a 4.3 per cent pace in the first quarter of the year and 3.8 per cent in April-June.
The revised data for the third quarter showed that the economy expanded 0.3 per cent from the second quarter. The original estimate was 0.5 per cent quarter-on-quarter growth.
As the U.S. has moved toward a possible reduction of its monetary easing, Japan’s central bank has reaffirmed its commitment to pumping money into the economy to achieve an inflation target of 2 per cent by 2015. Prices have only just begun to rise, but most of the increase has been attributed to rising costs for fuel and other imports.
The revised data Monday showed slower foreign and domestic demand than originally thought.
Private investment, excluding residential investment, was flat. Economic growth was supported by a 6.5 per cent increase year-on-year in public spending, reflecting the government’s boost in infrastructure investment and stepped up reconstruction in the areas devastated by the March 2011 tsunami.