Japan’s economic growth trails estimates

The Japanese economy grew at an annual rate of 0.7 per cent in the October-December period, revised down from an initial estimate of 1 per cent, the Government said on Monday.

Consumer spending — which accounts for about 60 per cent of gross domestic product (GDP) — edged up 0.4 per cent, revised slightly from a preliminary reading of 0.5 per cent, the Cabinet Office said.

Growth in capital spending was also revised downwards to 0.8 per cent from the initial estimate of 1.3-per-cent expansion, the office said.

Analysts expect consumer spending to rise in the current quarter, but a sharp slowdown is expected after a sales tax hike in April, when the Government will raise the current 5-per-cent rate to 8 per cent.

In December, Prime Minister Shinzo Abe’s Government approved 5.5 trillion yen ($54 billion) in economic stimulus measures in a bid to offset the possible impact of the tax increase.

Analysts also expected the Bank of Japan to take additional monetary easing to achieve a 2-per-cent inflation target.

Abe, who took office in December 2012, jump-started the economy with a package of economic policies dubbed Abenomics. The yen meanwhile has lost about 20 per cent of its value amid aggressive easing measures by the central bank.

The depreciation helped boost corporate earnings. However, critics say people’s earnings are not picking up. A government report said the income of workers’ households has declined 0.6 per cent in January for the fourth straight month.

In 2013 as a whole, Japan’s economy expanded 1.5 per cent, changed from an initial estimate of 1.6 per cent.

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