Japan Revises GDP Growth Lower After Weaker Capital Investment

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Japan’s economy expanded at a slower pace than initially estimated as businesses cut back investment in plants and equipment and consumers spent less, an outcome that points to the fragility of the growth achieved last quarter.

Gross domestic product grew at an annualized 4.8% from the previous three months, revised figures from the Cabinet Office showed Friday. That was a smaller expansion than the preliminary reading of 6% and came in below economists’ forecast of 5.6% growth.

Business spending figures were revised to show outlays slipped 1% on a non-annualized basis. Previously the government estimated that capital investment was flat versus the first quarter. Consumer spending also fell more than first forecast. Separate data showed wage growth slowed sharply to push real pay down by 2.5% after accounting for the impact of inflation.

Friday’s results fit in with indications that sluggish domestic conditions are exerting a drag on the country’s recovery. The data will support Prime Minister Fumio Kishida’s view that consumers and businesses need more help as they struggle in the face of the strongest inflation in decades. The weaker result also points to the need for the central bank to continue its ultra-easy policy to stimulate activity as prospects for external demand dim due to a slowdown in China and steady monetary tightening in other key economies. Economists expect Japan’s economy to contract in the current quarter.

 

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