Japan said yesterday the economy grew at a slower pace in the third quarter than initially estimated, with the fragile post-quake recovery weighed by a strong yen and the eurozone debt crisis.
The Cabinet Office said the economy expanded by an annualized 5.6 percent in the July--September quarter — lower than the 6 percent announced last month — with a government spokesman saying growth was “moderating.”
However, the figure represents Japan’s first economic expansion in three quarters, as the country recovers from the March 11 quake and tsunami disaster, with manufacturers ramping up production.
On an quarter-on-quarter basis, GDP growth was 1.4 percent in July-September, revised down from 1.5 percent, the figures showed.
“The data confirmed that business sentiment has been dampened by a stronger yen and uncertainties about the global economy,” Daiwa Institute of Research economist Satoshi Osanai said.
The downward revision was expected after the government said last week it was lowering its capital spending estimate, a key figure in calculating GDP.
On Thursday, official data showed Japan’s core private-sector machinery orders, a leading indicator of corporate capital spending, fell 6.9 percent in October from the previous month.
Last month, Bank of Japan Governor Masaaki Shirakawa warned the country would continue to face a “severe situation” and that -Europe’s sovereign debt crisis was the biggest risk factor in any recovery.
The crisis has also been a key issue behind Japan’s surging yen, which investors have flocked to as they seek a safe-haven currency.
The yen’s rise to post-World War II highs against the US dollar has prompted the central bank to intervene in foreign exchange markets to bring down the unit’s surging value, which erodes exporters’ profits and makes Japanese goods less competitive.
Meanwhile, South Korea’s central bank yesterday cut its growth forecast for next year to 3.7 -percent from an earlier projection of 4.6 percent because exports are expected to slow owing to Europe’s debt crisis and a global slowdown.
It is the slowest growth projection since Asia’s fourth-largest economy expanded just 0.3 percent in 2009.
The estimate is in line with private think tanks and international organizations, which said South Korea’s economy would grow less than 4 percent next year.
The Bank of Korea (BOK) also revised down this year’s growth forecast to 3.8 percent from its July projection of 4.3 percent.
“This [downward revision] reflects projections of slower export growth and weakening consumer and investment confidence, stemming from the worsening of the eurozone sovereign-debt problems,” the bank said in a statement.
Exports are forecast to grow 5 percent next year, down sharply from a 11.6 percent rise this year, it said.
The bank said inflation would ease to 3.3 percent next year from 4 percent this year.
“Downside risks to growth outweigh upside risks,” Lee Sang-woo, director-general at the BOK’s research department, said at a media briefing.
“The BOK’s 2012 growth forecast cannot be viewed as conservative as there is a chance that the growth outlook can be revised down,” he said, according to Dow Jones Newswires.
The bank on Thursday kept its key interest rate unchanged at 3.25 percent for a sixth straight month, underscoring a policy dilemma because growth momentum is weakening while inflation persists.