Japan's April-June GDP downgraded to 2.5 pct increase on weaker capex

Source: Xinhua| 2017-09-08 11:17:28|Editor: liuxin
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TOKYO, Sept. 8 (Xinhua) -- Japan's economy grew an annualized 2.5 percent in the April-June period with the figure being downwardly revised from a preliminary estimate of 4.0 percent growth, owing to a weaker-than-expected rise in capital spending, data from the Cabinet Office showed on Friday.

The revised GDP figure also missed median market expectations for 2.8 percent growth, with growth in private consumption, a vital driver in the world's third-largest economy, revised down from an initial 0.9 percent to 0.8 percent.

The expansion in real gross domestic product adjusted for inflation on a quarter-on-quarter bases was also lower than the preliminary figure after being revised to a 0.6 percent increase, down from a preliminary 1 percent increase.

The government initially said in a preliminary report released on Aug. 14 that the economy here grew an annualized 4.0 percent in real terms, or 1.0 percent from the previous quarter in real terms.

While government officials said the revised data shows that the economy has expanded for a sixth straight quarter, the worse-than-expected figures for corporate capital spending indicates a degree of resistance in companies investing in the short-to-mid-term future, analysts here remarked Friday.

Corporate capital spending rising just 0.5 percent in the April-June period, down from 2.4 percent in the preliminary data, is a testament to this, analysts said.

"Many companies want to invest, but they realize that the potential growth rate is very low, so they don't want to invest excessively," Hiroaki Muto, economist at Tokai Tokyo Research Center Co. said previously.

This has had a knock-on effect to wages and the tightening thereof, and household spending, both mainstays of the economy, with the figures running somewhat contrary to the government's notion of a "domestic-led recovery."

"It's difficult to see Japan switching toward domestic-led economic growth from here, but unless external demand suffers any major declines, a moderate rate of expansion should continue," said Atsushi Takeda, an economist at Itochu Corp.

"In terms of external demand, strength in the yen is a key risk factor," Takeda added.

Exports, to this point, dropped 0.5 percent, unchanged from the preliminary data, while public investment increased 6.0 percent, upgraded from a 5.1 percent rise, the Cabinet Office said.

In nominal terms, or unadjusted for price changes, the economy booked an annualized 3.0 percent growth, some way off the 4.6 percent reported earlier.