Japan’s economy grew at a slower pace than initially thought in the final quarter of last year, revised data showed yesterday, underscoring concerns about the pace of recovery under Japanese Prime Minister Shinzo Abe’s policy blitz.
The fresh figures will turn the focus on to Bank of Japan policymakers as they start a two-day meeting, with speculation they could unveil further monetary easing measures to counter a possible slowdown from a sales tax rise next month.
There are fears the rate hike — seen as crucial to bringing down Japan’s massive national debt — will hit consumer spending and in turn dent the country’s nascent recovery.
The world’s No. 3 economy expanded 0.2 percent in the quarter to December last year and 1.5 percent through last year, the latest data showed.
That compared with earlier results showing GDP grew 0.3 percent for the October-December period and 1.6 percent for last year.
However, the new figures still mark Japan’s best annual performance in three years, as Abe’s growth blitz of big spending and monetary easing — dubbed Abenomics — rippled through the economy.
The economy grew 1.4 percent in 2012 and contracted 0.5 percent in 2011 owing to the March 11 quake-tsunami disaster and subsequent nuclear crisis.
“The recovery... lost pace in the second half of the year,” London-based Capital Economics said.
“Nonetheless, it would be premature to conclude that Abenomics has failed based on these figures alone. After all, private consumption and business investment were stalling before PM Abe’s election, but have picked up speed since then. The problem instead lies on the external side,” it added.
A key reason for the downward revision was weak exports, as Japan’s trade imbalance balloons on the back of surging energy bills, aggravated by the shutdown of its nuclear reactors in 2011 in response to the Fukushima Dai-ichi crisis.
In separate data yesterday, the deficit in the January current account — Japan’s broadest measure of trade with the rest of the world — more than quadrupled to another record figure of ￥1.589 trillion (US$15.4 billion).
The growing imbalance was driven by the soaring costs of imported energy — made pricier by a weak yen — and lackluster growth in shipments of Japanese goods abroad.
Critics fear that the controversial tax rise to 8 percent from 5 percent could curtail the budding recovery in an economy beset by years of falling prices, which curbed spending and business investment.
While Tokyo has also made some headway on its bid to stoke lasting inflation, consumer and corporate spending in the latter half of the year failed to take off, underscoring a still-cautious mood among households and in the country’s boardrooms.
The tax rise is perhaps the biggest threat to Abe’s efforts and has led to speculation the Bank of Japan will be forced to expand its already unprecedented stimulus program.