Japan Oct.-Dec. GDP growth cut to annualized 0.1% on consumption
TOKYO (Kyodo) -- Japan's economy expanded an annualized real 0.1 percent in October to December, downgraded from an increase of 0.6 percent reported earlier, the Cabinet Office said Thursday, as private consumption growth was slower than initially thought.
Real gross domestic product growth, adjusted for inflation, stood at 0.02 percent on a quarterly basis, revised down from 0.2 percent. GDP is the total value of goods and services produced in a country.
The world's third-largest economy rebounded from an unexpected contraction in July-September but lacked momentum.
Accelerating inflation has been hurting household sentiment, even as a recovery in demand for services that was depressed in the midst of the COVID-19 pandemic has been supporting consumption, a key driver of economic growth.
Private consumption, which accounts for more than half of the economy, rose 0.3 percent, slower than an earlier reading of 0.5 percent but still marking an increase for the third straight quarter.
Capital spending, another major component of GDP, fell 0.5 percent, unchanged from the preliminary figure, following two straight quarters of expansion.
"The GDP data does not change the assessment of the economy but gives the impression that households are curbing spending on goods in the face of rising prices," said Saisuke Sakai, senior economist at Mizuho Research & Technologies.
Prime Minister Fumio Kishida is considering drawing up additional inflation relief measures as households are feeling the pinch of higher prices for everyday goods.
Based on the view that the recent inflationary pressure will ease later this year, the Bank of Japan has stuck to its ultralow interest rate policy, a stance that governor nominee Kazuo Ueda is expected to maintain.
"At a time of economic slowdowns overseas exports will likely struggle, while private consumption will be dragged down by accelerating inflation and capital spending is expected to remain on a recovery trend. Overall, the economy will continue to grow, albeit at a moderate pace," Sakai added.
The United States has been hit by stubbornly high inflation, prompting the Federal Reserve to raise interest rates to tame it. Aggressive monetary tightening by other major central banks has raised concern about slower economic growth.
Uncertainty also remains over China, a key trading partner for Japan, though the ending of its strict "zero-COVID" policy is widely seen by economists as a plus for the world's second-largest economy.
A recovery in the number of visitors from China is expected to provide a boost to the Japanese economy, with their spending during travel treated as exports in GDP. Japan has seen a gradual return of inbound tourists with the easing of strict border controls imposed amid the coronavirus pandemic.
Public investment dropped 0.3 percent, less than the decrease of 0.5 percent announced earlier.
Nominal GDP expanded 1.2 percent, or an annualized 4.7 percent, downgraded from 1.3 percent and 5.2 percent, respectively.