Aug 13, 2013

    Japan growth slows unexpectedly in Q2

    JAPAN'S economic growth slowed in the second quarter to an annualised rate of 2.6 per cent, government data showed yesterday, clouding the outlook for the economic policies of Prime Minister Shinzo Abe and raising concerns that he may put off moves to tackle the country's enormous public debt.

    This was the third consecutive quarter of growth for Japan's roughly US$5-trillion (S$6.3-trillion) gross domestic product, the third-largest in the world, after the United States and China.

    Still, the expansion fell short of analysts' expectations for Japan, which grew at a robust pace of 3.8 per cent in the previous quarter, helped by the Abe government's bold monetary and fiscal-stimulus drive.

    Economists polled by Reuters had expected Japan's economy to grow at a similarly-healthy clip in the April-June quarter. But weak capital expenditure slowed growth, according to figures released by the Cabinet Office.

    Compared with the previous quarter, the Japanese economy grew 0.6 per cent in the latest quarter.

    Signs of slowing growth could strengthen the hand of critics of Mr Abe's economic drive.

    Weaker growth could also derail Japan's plans to raise taxes and pare back its soaring debt, which reached 1 quadrillion yen (S$13 trillion) in the second quarter, more than twice the size of its economy.