TOKYO: Japan’s economy expanded at a slower than initially reported pace in October to December, with firms tightening spending on plant and equipment and sharply cutting inventories as the coronavirus pandemic hit demand.
The slower growth was mainly due to a sharper contraction in private inventories and capital expenditure expanding less than previously thought in the fourth quarter, even as exports remained solid, report agencies.Separate data showed household spending was hit by a bigger annual drop in January than in the prior month, a sign the COVID-19 pandemic was keeping consumers cautious about shopping.
The economy grew an annualised 11.7 per cent in October to December, weaker than the preliminary reading of 12.7 per cent annualised growth to mark the second straight quarter of growth, Cabinet Office data showed on Tuesday (Mar 9).
The reading, which was weaker than economists’ median forecast for a 12.8 per cent gain, translates into a real quarter-on-quarter expansion of 2.8 per cent from October to December, versus a preliminary 3 per cent gain.
Capital spending grew 4.3 per cent from the previous quarter, lower than a preliminary 4.5 per cent rise, but outpacing the median forecast for a 4.1 per cent increase.
Private inventories, including raw materials and manufactured products, subtracted 0.6 percentage points from revised growth domestic product growth, worse than a negative preliminary contribution of 0.4 percentage points.
“Although vaccination started in Japan, it will take time to yield its impact, so the economy is forecast to go though some ups and downs,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.“We expect the economy will pick up from the second quarter but it will be difficult to regain soon what it will lose in the first quarter.”
Private consumption, which accounts for more than half of GDP, rose 2.2 per cent from the previous three months, matching the preliminary reading.
Net exports - or exports minus imports - added 1.1 percentage points to revised GDP growth, while domestic demand lifted it by 1.8 percentage points, weaker than a preliminary contribution of 2 percentage points.
The worse than expected GDP revision comes after exports and factory output picked up in January, signalling a stronger recovery in global demand following last year’s deep coronavirus slump.
Household spending, however, fell 6.1 per cent in January compared with the same month a year earlier, official data showed on Tuesday, worse than the 2.1 per cent drop expected by economists in a Reuters poll.