Japan's economy grows at 0.5 percent annual pace in Oct-Dec

In this Jan. 11, 2018 photo, people walk on a pedestrian crossing at Shibuya district in Tokyo. Japan's economy grew at a slower than expected 0.5 percent annual pace in the October-December quarter, as strong exports failed to fully compensate for relatively weak domestic demand, according to the preliminary data released Wednesday, Feb. 14, 2018. (AP Photo/Eugene Hoshiko)

TOKYO — Japan's economy grew at a slower than expected 0.5 percent annual pace in the October-December quarter, as strong exports failed to fully compensate for relatively weak domestic demand.

The preliminary data released Wednesday show Japan has managed eighth straight quarters of growth, the longest expansion since the financial bubble of the late 1980s. Growth for the entire calendar year was 1.6 percent, up from 0.9 percent in 2016.

But the figures for the last quarter were mostly below analysts' forecasts.

"GDP growth slowed sharply last quarter and we think that the economy won't expand as strongly this year as it did in 2017," Marcel Thieliant of Capital Economics said in a commentary.

He noted that "capacity shortages," where short-handed or inadequately equipped factories cannot keep up with demand, tend to slow growth. "Over the last two decades, GDP has never risen by more than 1 percent over the coming year when capacity shortages were as pronounced as they are now," Thieliant said.

Growth in the previous quarter was revised down to 2.2 percent from 2.5 percent.

Housing investment weakened although overall consumer spending, which accounts for the lion's share of activity, was higher.

The economy grew 0.1 percent in quarterly terms. The lackluster performance reflects the difficulty of stimulating more investment and spending as Japan's population ages and declines.

The growth spurt that made Japan an economic powerhouse by the late 1980s ended in the collapse of a massive bubble in asset prices and debt, bringing on years of slower growth and restructuring of industries.

A rebound in demand thanks to stronger growth in China, the U.S. and other major economies has helped Japan's export manufacturers, helping to keep the jobless rate below 3 percent. But wage hikes have lagged expectations, limiting the appetite of Japanese households and businesses to step up their spending.

Japan's central bank has been infusing trillions of yen (hundreds of billions of dollars) of cash into the economy through recession-fighting asset purchases, mostly of government bonds, to counter deflation. That has encouraged investment by keeping the cost of borrowing ultralow — its key interest rate remains at minus 0.1 percent.

Bank of Japan Gov. Haruhiko Kuroda has presided over that "big bazooka" of monetary easing, and Prime Minister Shinzo Abe looks set to reappoint him for another five-year term. That would give Kuroda more time to work toward a still distant inflation target of 2 percent at a time when worries over U.S. inflation are rising, rattling financial markets.

You may also interested in

China launches second space station, Tiangong 2

Sep 15, 2016

China has launched its second space station in a sign of the growing sophistication of its...

China starts 2017 engulfed by smog, issues...

Jan 2, 2017

Beijing and other cities across northern and central China are shrouded in thick smog, prompting...

China begins to ease its 2,000-year-old monopoly...

Jan 3, 2017

China has started an overhaul of its salt industry, easing a monopoly that has existed in some form...

Choked by smog, Beijing creates new environmental...

Jan 8, 2017

Officials in Beijing have announced a new environmental police squad to root out illegal burning in...

China aircraft carrier capabilities tested on...

Jan 14, 2017

China's sole aircraft carrier has returned home following a three-week cruise during which its...

People also read these

China says it can't end North Korea nuke program...

Sep 12, 2016

China says the United States has inflamed the conflict on the Korean Peninsula and must carry the...

China starts 2017 engulfed by smog, issues...

Jan 2, 2017

Beijing and other cities across northern and central China are shrouded in thick smog, prompting...

China says some factories have violated anti-smog...

Jan 3, 2017

China's environmental ministry says an unspecified number of companies have violated measures meant...

Choked by smog, Beijing creates new environmental...

Jan 8, 2017

Officials in Beijing have announced a new environmental police squad to root out illegal burning in...

China pledges further cuts in excess steel, coal...

Jan 10, 2017

China's top economic planner has pledged to continue cutting steel and coal production, which have...

About Us

Frontal Report is an emerging leader in all forms of media. We aim to be the leading news brand for readers around the world.

Contact us: sales@frontalreport.com

Subscribe Now!