Japanese economy remains sluggish
Print Edition
JAPAN’S economy contracted less than initially estimated in the final quarter of 2015 but private consumption remained weak, underscoring the challenges facing Prime Minister Shinzo Abe in restoring growth amid intensifying overseas headwinds.
While many analysts expect growth to have rebounded modestly in the current quarter, the bleak outlook for global demand has led some to predict another contraction that will push Japan back into technical recession — defined as two straight quarters of shrinking growth.
The weak economic backdrop will keep the Bank of Japan under pressure to further expand monetary stimulus, although central bank policy-makers meeting for a rate review next week are wary of acting so soon after adopting negative interest rates late in January.
Sluggish growth could also heighten market speculation that Abe may delay a second consumption tax hike to 10 percent from 8 percent scheduled in April next year, some analysts say.
Japan’s economy, the world’s third-largest, shrank an annualized 1.1 percent in the October-December quarter, less than a preliminary estimate of a 1.4 percent contraction, Cabinet Office data showed yesterday. That compared with a median market forecast for a revision to a 1.5 percent contraction.
“Economic indicators in January are weak,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“The economy likely won’t rebound significantly in January-March.
“The government may adopt some form of stimulus steps and may delay the sales tax hike if growth is weak in January-March and prospects emerge that it will stay stagnant in April-June.”
Growth in capital expenditure was revised up to a 1.5 percent increase from a preliminary 1.4 percent rise.
Private consumption fell 0.9 percent.
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