business

Japan's 2nd-quarter GDP grows at slower pace on weaker capital spending

6 Comments
By Daniel Leussink

Japan's economy grew at a slower pace than initially estimated in the second quarter on the back of softer capital spending, signaling strains on the economy from weaker global growth and the U.S.-China trade war.

Weakness in the global economy and trade protectionism have emerged as risks to growth and increased pressure for the Bank of Japan (BOJ) to expand stimulus when it meets later this month.

The economy grew an annualized 1.3% in April-June, weaker than the preliminary reading for 1.8% annualized growth, Cabinet Office data showed Monday.

The reading was in line with the economists' median forecast for a 1.3% gain.

The annualized growth rate translates into quarter-on-quarter expansion of 0.3% from January-March, compared with a preliminary reading for a 0.4% gain.

Capital spending rose just 0.2% from the previous quarter, much lower than a preliminary 1.5% rise and the median forecast for a 0.7% increase.

Private consumption, which accounts for some 60% of gross domestic product, advanced 0.6% from the previous three months, matching the preliminary reading.

Net exports - or exports minus imports - subtracted 0.3 percentage point from revised GDP growth, while domestic demand added 0.6 percentage point.

The outlook for the world's third-largest economy remains clouded as risks from declining manufacturing overseas and at home hit exports hard.

Analysts have also warned of a possible drop in domestic consumption after Japan raises its sales tax to 10% as planned next month. That, in turn, threatens to leave the economy without a growth driver unless global demand rebounds.

BOJ Governor Haruhiko Kuroda has kept the door ajar for cutting interest rates further into negative territory, saying last week such move is among the bank's policy options.

Speculation is growing that the BOJ could ease policy as early as this month to prevent the yen from spiking, which could become increasingly likely if the U.S. Federal Reserve and the European Central Bank unveil new easing measures.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

6 Comments
Login to comment

Weakness in the global economy and trade protectionism have emerged as risks to growth and increased pressure for the Bank of Japan (BOJ) to expand stimulus when it meets later this month.

Stop looking for excuses already! And if you haven't noticed all the stimulus that you have flushed into the economic toilet bowl here is only going to feed those who already have enough money as it is!

Under-employment, stagnant wages, the ever aging population, are not going to be helped by any more free money to the large corporations who dont use the cash for their workers!

Analysts have also warned of a possible drop in domestic consumption after Japan raises its sales tax to 10% as planned next month. That, in turn, threatens to leave the economy without a growth driver unless global demand rebounds.

One does not need a degree in economics to understand that the drop is coming fast. This SHOULD be expected, just like the uptick in consumption prior to the tax hike as well. The consumption tax is counter productive to growth!

Keep money in the hands of the consumer, they will spend it, IF they feel that the outlook for sustained increases will occur. Otherwise, typically speaking, Japanese consumers will drop more money into savings when the outlook starts looking bad.

The the BOJ gets more money to use as stimulus, and more money funnels into large corporations, who have over the past few years been reporting record profits, yet the people see none of their money come back to them.

BOJ Governor Haruhiko Kuroda has kept the door ajar for cutting interest rates further into negative territory, saying last week such move is among the bank's policy options.

Basically speaking negative territory means that business will be given money to borrow money right?

Yet we the consumer have to PAY money (interest) to borrow money from a financial institution..damn I wish I could run my household like the government runs away with our money!

You give me money to borrow yours, which I return at face value and no interest.

2 ( +4 / -2 )

But the Yen is at ridiculously strong levels against the dollar. It should be ¥150 to $1

3 ( +5 / -2 )

Japan's economy grew at a slower pace than initially estimated in the second quarter on the back of softer capital spending, signaling strains on the economy from weaker global growth and the U.S.-China trade war.

Why are they blaming the so-called 'trade war' between the US and China? Japan's economy has been drowning in its own urine for two decades and the pee is getting deeper with the next sales tax increase in a few weeks and a new structure of city taxes, pension scam and health insurance in 2020. After nearly two decades of being a financial prisoner in Japan I am out of hear in December and will not be looking back.

Here's a little something for all you long-termers to consider. My Mrs is Japanese. She has paid over 6million yen into the pension scam over twenty odd years. She received a statement the other day stating her entitlement is only 1.3 million yen. That is less than 20% of her investment. That is how Japan works! Go to a doctor to receive the absolute minimum health care despite paying high premiums. Go to the city hall and see groups of workers sitting around doing nothing except soaking up your city taxes. Renew a rental lease for an apartment or car parking space and pay an extra month's rent for nothing other than a gift. Get the registration done on your car and pay ¥150,000+. I get mine done for ¥70,000 coz I don't pay the 'gift fees'. Go to a restaurant and get charged ¥1,000 each table charge because they brought out a starter resembling snot that you didn't order. There is no end to the corruption and rip offs in Japan.

3 ( +6 / -3 )

“The yen should be 150 to $1.”

It’ll never be allowed. The huge trade surpluses Japan’s able to rack up now, when it’s 105 would balloon out even further. Instead, 70-75 to the dollar is quite feasible. Weaponising the exchange rate will make them realise that the old game plan of exploiting Western openness yet working assiduously to quarantine themselves is no longer viable. A significant devaluation of the $US will also be the wake up call the US needs to wean itself off artificially cheap imports, rejuvenate its shrunken industrial base and get its own economic house in order

-2 ( +0 / -2 )

Disillusioned: “She has paid over 6million yen into the pension scam over twenty odd years. She received a statement the other day stating her entitlement is only 1.3 million yen.”

What kind of a pension has a cap? Are you saying that whether the missus lives to 80 or 120 one point three million yen is all she’s going to get? If she’s already paid 6 million, and it’s kokumin nenkin, that means she’s been paying for around 20 years and she’d already have qualified for a pension of at least 50 万円 a year payable until death. Something gives.

0 ( +0 / -0 )

Negative interest rates will be introduced after the sleeping pill 10% consumption tax next month....

1 ( +1 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites