Tokyo, March 9 (BNA): Japan’s economic recovery was weaker than initially estimated in the fourth quarter of 2021, revised data showed on Wednesday, as the marked recovery in consumer and business spending was weaker than initially reported.
Downward-adjusted growth is bad news for policymakers tasked with keeping the country’s fragile recovery on track, Reuters reported, as soaring commodity prices and persistent supply disruptions exacerbated economic uncertainty.
Revised GDP data released by the Cabinet Office on Wednesday showed that Japan expanded at an annual rate of 4.6% in the October-December period. That was less than the median forecast by economists for a 5.6% gain and the 5.4% preliminary reading released last month.
“This indicates that Japan’s economic recovery from the epidemic is weaker than that of Europe and the United States,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
On a quarterly basis, GDP expanded 1.1%, below the average market expectation for a 1.4% gain.
A government official told a media briefing that the change was mostly due to a reduction in private consumption.
Private consumption, which makes up more than half of Japan’s gross domestic product, rose 2.4% in the October-December period from the previous quarter, after adjusting for an estimated initial gain of 2.7%. Spending in the services sector, in particular, was reduced to a 3.1% expansion from an initial increase of 3.5%.
The official said recent Industry Ministry data for December showed spending on services such as restaurants and train rides was weaker than the initial estimate based on private sector figures.
“Private consumption was likely weak in January, due to weak spending on capital goods such as cars and services,” Minami said.
In the fourth quarter, capital spending grew 0.3%, less than economists had expected for a 0.7% increase and a preliminary figure of 0.4%.
While data earlier this month showed strong business spending in the fourth quarter, revised GDP numbers reflected weakness in items such as software investment, the official said.
Domestic demand as a whole contributed 0.9 percentage point to the revised GDP numbers, while net exports added 0.2 percentage point.
Economists polled by Reuters last week had forecast 0.4% annual growth in the January-March quarter, downplaying earlier forecasts given changing contagion from the Ommicron virus and uncertainties.
Yosuke Shimoda, chief economist at the Japan Research Institute, said he still expects positive growth in the first quarter.
MI