World Economy

Japan GDP Growth Slowing

Japan GDP Growth SlowingJapan GDP Growth Slowing

Japan’s economic growth was expected to slow in the second quarter, weighed down by weak domestic demand and stagnant exports, a Reuters poll found on Friday.

Weak economic growth would be a setback for Prime Minister Shinzo Abe who said this week that the top priority for his reshuffled cabinet was growing the economy and beating deflation.

Gross domestic product was expected to expand at an annualized rate of 0.7% in April-June, the poll of 21 analysts showed, following 1.9% annualized growth in the first quarter.

This would be a quarterly expansion of 0.2% after a 0.5% rise in January-March.

“Domestic demand and exports remained weak while the boost from the Leap Year has faded so the growth rate was probably slow,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“The impact of a strong yen on exports may be seen soon. We expect they will probably stay weak this year.”

Private consumption, which accounts for roughly 60% of GDP, was seen rising only 0.2% in the second quarter, from a 0.6% gain in the previous quarter.

Capital spending was expected to slip 0.1% after a 0.7% decline, the poll found.

 The cabinet office will issue the GDP data on Aug. 15.

The finance ministry will publish the June current account balance on Monday, which is expected to show a surplus of 1.0567 trillion yen ($10.45 billion). It would be 24th straight monthly surplus but the strong yen is expected to reduce the exchange value of overseas income.

Meanwhile, real wages in Japan rose the most in almost six years in June, data showed on Friday, but the gain was exaggerated by the effect of falling prices, highlighting the government’s struggle to pull the economy out of deflation.