The Japanese economy grew at a slower pace than initially expected in the third quarter, with both business investment and inventory growth flagging.
The Cabinet Office said on Thursday that the economy grew 1.3 percent in the three months to the end of September, far lower than original estimates of 2.2 percent.
Capital expenditure fell 0.4 percent, with most of the growth coming from an increase in exports to China. Net exports added 0.3 percentage point to growth in the three months from July to September, less than a 0.5 percentage point contribution in the previous quarter.
The new data indicated that investment by companies in the quarter was particularly weak. However this may change as the dollar strengthens in the run-up to Donald Trump’s presidency, Martin Schulze from the Fujitsu Research Institute in Tokyo told the BBC:
“With a stronger dollar and potentially higher demand in the US, companies are returning to their investment planning boards, which would fill the missing link in Japan’s current recovery.”
Japan has seen poor growth for several years, despite Prime Minister Shinzo Abe’s new policies designed to stimulate the stagnant economy. So-called Abenomics was introduced in 2012 and involved a three prong approach, pumping more money into the economy, cutting regulation and increasing government spending.
Japan’s government have just approved a 7.5 trillion yen stimulus package, including an increase in spending on public works, which is likely to push up growth in the coming year. Whilst Abenomics appears to have had limited effect overall, Japan remains the third largest economy in the world.