Tokyo: Japan’s Cabinet Office slashed its economic growth reading for July-September on Thursday, revising down initial estimates of capital expenditure and inventories — renewing concerns about Japan’s growth prospects.
The Cabinet Office said the economy grew at a 1.3 per cent annualised rate in July-September, a severe revision from the 2.2 per cent annualised growth first estimated and barely over half the median estimate for a 2.4 per cent annualised expansion.
In one positive sign, consumer spending was revised up, but the data on the whole could temper optimism that the economy could accelerate heading into next year.
The revised figure translates into quarter-on-quarter growth of 0.3 per cent in real, price-adjusted terms, against an initial reading of 0.5 per cent growth and the median estimate for 0.6 per cent growth.
Capital expenditure fell 0.4 per cent in the quarter, versus the preliminary estimate of 0.0 percent, as steel and real estate companies reduced investment.
Inventories subtracted 0.3 percentage point from growth, more than a preliminary reading of a 0.1 percentage point contraction.
The government adopted a new base year for calculating gross domestic product that led to changes in previous data and made forecasting revised third quarter GDP more difficult, economists said.
The new calculation method, which will include research and development as capital expenditure for the first time, has been applied to GDP data going back to 1994.
Private consumption, which accounts for roughly 60 per cent of the economy, rose 0.3 per cent, versus the preliminary estimate of 0.1 per cent growth.
