The economy grew at a slower pace than initially estimated in the final quarter of 2014, as corporate capital spending declined amid the weak recovery in consumer demand following last year’s consumption tax hike, government data said Monday.
Gross domestic product — the total value of goods and services produced at home — grew by an annualized real 1.5 percent, downgraded from 2.2 percent, in the October-December quarter.
The market on average had expected an expansion of roughly 2.2 percent.
The figure translated into a gain of 0.4 percent over the previous quarter instead of the 0.6 percent listed in the Cabinet Office’s preliminary report on Feb. 16.
The world’s third-largest economy fell into a technical recession last year after the April consumption tax hike to 8 percent from 5 percent, raising doubts about Prime Minister Shinzo Abe’s unorthodox “Abenomics” economic strategy.
Business investment, which the government sees as key to revitalizing the economy, eased 0.1 percent instead of growing 0.1 percent as earlier reported, falling for the third quarter straight as companies apparently remained cautious about the outlook for the economy.
Private consumption, accounting for around 60 percent of GDP, was meanwhile upgraded to growth of 0.5 percent instead of the earlier 0.3 percent, due partly to a rebound in sales of automobiles, clothes and beverages. Despite the revised figures, consumption remains slow to recover.
“While October-December GDP grew for the first time in three quarters and gave reassurance that the economy is bottoming out, the results also underscored anew the weakness in the recovery of private consumption and corporate capital expenditure,” said Junichi Makino, chief economist at SMBC Nikko Securities Inc.
Mitsumaru Kumagai, chief economist at Daiwa Institute of Research, said the revised private consumption figure, following 0.3 percent growth in the July-September quarter, was “one of the few positive factors” in Monday’s data. But he also said the recovery continues to be “extremely slow.”
The weaker GDP growth could prompt the bond-gobbling Bank of Japan to take even further monetary easing steps to prop up the economy, some economists said.
Chief Cabinet Secretary Yoshihide Suga told a news conference the government maintains the view that the Japanese economy is on a recovery track as a whole.
The latest figures also showed housing investment fell an unchanged 1.2 percent while public investment climbed 0.8 percent, raised from an earlier estimated 0.6 percent growth.
Exports grew 2.8 percent, revised upward from a 2.7 percent increase, with imports unchanged at a 1.3 percent rise.
In nominal terms, or unadjusted for price changes, the economy grew 1.0 percent quarter on quarter, downgraded from a 1.1 percent expansion.
For 2014, GDP fell 0.03 percent in real terms on year for the first contraction in three years, downgraded from a 0.04 percent increase.
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