Japanese growth slows as sales tax hike looms
March 11, 2014, 12:09 am TWN
TOKYO -- Japan's economy grew at a slower pace than initially thought in the last quarter of 2013, revised data showed Monday, underscoring concerns about the pace of recovery under 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 number-three economy expanded 0.2 percent in the quarter to December and 1.5 percent through 2013, the latest data showed. That compared with earlier results showing gross domestic product grew 0.3 percent for the October-December period and 1.6 percent in 2013.
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,” said London-based Capital Economics.
“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.”
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 crisis.
Atomic power once supplied about a third of the resource-poor nation's energy.
Ballooning Trade Imbalance
In separate data Monday, 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 yen (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 8.0 percent from 5.0 percent will curtail the budding recovery in an economy beset by years of falling prices, which curbed spending and business investment.