Japan’s economy grew annualized 1.0% in October-December quarter

Kyodo, AP

The Japanese economy grew an annualized real 1.0 percent in the fourth quarter of 2013, marking a fourth straight quarterly expansion, the government said Monday.

The growth in October-December inflation-adjusted gross domestic product corresponds to a 0.3 percent expansion from the previous quarter.

But the growth rate was less than half of some forecasts despite a boom in housing construction and stronger public and private spending, raising pressure on the central bank to step up already massive stimulus to sustain the recovery, some analysts said.

Slower growth in China and other major markets has taken a toll on exports, crimping growth at a critical time for Prime Minister Shinzo Abe’s recovery program.

“The big disappointment was net exports, which shaved off 0.5 percentage points from headline growth,” Capital Economics said in a commentary Monday.

GDP is the total value of goods and services produced domestically.

Consumption, the biggest component, accounting for around 60 percent of GDP, rose a real 0.5 percent, marking a fifth straight monthly increase.

Exports grew 0.4 percent after decreasing 0.7 percent in the July-September quarter, due mainly to increased demand in emerging Asian economies, the government said.

In nominal terms, or unadjusted for price changes, the economy expanded 0.4 percent on quarter.

The GDP deflator, a wider price gauge than the consumer price index, was up 0.1 percent, signaling that the economy is on moving toward exiting deflation.

In 2013, Japan’s GDP grew a real 1.6 percent for the second consecutive year of expansion.

The Bank of Japan’s monthly monetary policy meeting begins Monday. Ahead of the release of the latest data, the central bank had been expected to keep monetary policy unchanged, while promising more stimulus if necessary to cushion the blow to consumers and corporate demand from a 3 percentage point sales tax hike that takes effect April 1.

Economists expect the tax hike to cause the economy to contract in April-June after expanding in this quarter, as consumers move up purchases to beat the tax hike and then tighten their belts afterward to compensate for higher costs.