Japan’s economy grew at a slower than forecast 0.2 per cent annual rate in the April-June quarter, as the recovery was sapped by weaker exports and business investment, the government said Monday. Growth for the world’s third-largest economy was flat on a quarterly basis, adding to pressure on the Bank of Japan to take further action to stimulate slack corporate spending.
The economy expanded at a 0.5 per cent rate in the January-March quarter. Economists had forecast that it would maintain or even slightly better that pace in April-June. But consumer demand, which accounts for nearly two-thirds of business activity, rose only 0.2 per cent. A recent strengthening in the value of the Japanese yen, and weaker oil prices, have slowed progress toward a 2 per cent inflation target set by Abe and the central bank.
Moving to salvage his “Abenomics” strategy for fighting stagnation, Prime Minister Shinzo Abe recently proposed 28 trillion yen ($267 billion) in spending initiatives meant to get consumers and businesses to spend more money and support the stalling recovery.
Japan’s Economy Minister, Nobuteru Ishihara, said on Monday the economy is showing some weakness but continues to recover moderately as a trend. “Japan’s economy is likely to achieve a recovery driven by private demand” though the government must be mindful of risks such as slowing emerging market growth and uncertainty over the fate of Britain’s exit from the European Union, Ishihara said in a statement issued after the release of April-June gross domestic product (GDP) data.