Japan's economy grew 0.3 percent in July-September from the previous quarter, government data revealed Monday, which is less than the government had initially estimated. The downward revision, from a preliminary 0.05 percent increase, comes as private investment stalled, Reuters reports.
The decrease underlines the flimsiness of Japan's economic recovery, which has experienced a temporary boost from pent-up demand ahead of an increase in the sales tax in April 2014 that will drive down spending, the news site notes.
According to Bloomberg, growth may rebound this quarter and in the first three months of 2014 as consumers splurge before the tax increase goes into effect.
Gross domestic product expanded an annualized 1.1 percent from the second quarter compared with a preliminary reading of 1.9 percent, the Cabinet Office said Monday, according to Bloomberg.
Prime Minister Shinzo Abe has urged companies to bolster wages as he tries to reignite Japan's economy, and has praised Hitachi Ltd. and Toyota Motor Corp. for agreeing to help in the effort. “The slowdown in growth could be temporary,” Kohei Okazaki, a Nomura Securities Co. economist, mentioned prior to the report. “Japan’s economy will probably regain momentum toward the end of March as last-minute demand before the sales-tax increase will provide a tailwind for consumption.”
Last week, the cabinet gave the green light to an 18.6 trillion yen ($180 billion) economic package to soften the blow from April's sales-tax increase.
According to Bloomberg, the measures -- including 5.5 trillion yen in spending -- are projected by Japan's government to boost real GDP by about 1 percent and create some 250,000 jobs.
A Bloomberg News survey noted that the Japanese’s economy is projected to expanded an annualized 3.6 percent during this quarter and 4.8 percent in the January-March period before it contracts 4.5 percent in the second quarter of next year.