World Economy

Japan Growth Below Estimates

Exports remain a major contributor to growth for Japan.Exports remain a major contributor to growth for Japan.

Revised data show Japan’s economy expanded at a slower than hoped for 1.2% annual pace in the last quarter of 2016. The figure released Wednesday was slightly higher than the preliminary estimate of 1% annual growth for the world’s No. 3 economy. It was below economists’ forecasts for growth of 1.4% or higher.

In quarterly terms, the economy expanded 0.3% in the October-December. The earlier estimate was 0.2%. A slight increase in corporate investment appeared to be the main factor behind the slight upgrade. Private demand remained flat, and public spending fell slightly, AP reported.

“In fact, the data underline that the large fiscal stimulus package revealed last July remains but a mirage,” Marcel Thieliant of Capital Economics said in a commentary. Public investment fell for the second straight quarter, he noted, and was the lowest it has been since the Prime Minister Shinzo Abe launched his “Abenomics” recovery program of public spending, lavish monetary stimulus and reforms.

There was no change in the estimate of 1% annual growth in 2016.

Abe has struggled to deliver on promises of sustained, stronger growth as frugal consumers and companies have opted to save rather than spend more. Instead, corporations are investing heavily abroad, in markets that promise faster growth than in aging Japan, where the population is shrinking.

Balance of payments data show that foreign investment overseas, which has been climbing for many years, rose to a record high of 3.4% of Japan’s GDP in the past year.

Exports remain a major contributor to growth for Japan, and uncertainty over President Donald Trump’s trade policies remain a concern.

Meanwhile, the current account surplus shrank for the first time in eight months in January, weighed down by a widening trade deficit amid rising crude oil prices, government data showed Wednesday, Kyodo reported.

The surplus in one of the widest gauges of a country’s international trade, stood at ¥65.5 billion ($575 million), down 88.9% from a year ago.

The trade of goods registered a deficit of ¥853.4 billion, the first red ink figure in a year, as the value of imports grew more than exports, the finance ministry said in a preliminary report. China’s Lunar New Year holiday from late January is also believed to have weighed on shipments from Japan.



Add new comment

Read our comment policy before posting your viewpoints