Japan’s GDP growth for third quarter weaker than forecasted

The Dollar Business Bureau

Japan’s GDP grew at just 0.3% during the third quarter, said the data released by the Japanese government, as the world's third largest economy witnessed an insufficient corporate spending and dwindling exports growth.

The latest growth figures were lower than an earlier estimated growth rate of 0.5% during the July-September period.

The weak GDP growth translates into an annual growth rate of 1.3%, falling way behind the market forecast of 2.3% expansion during the current year.

There have been mixed sentiments in the market and among the economists, who said that although the country has been registering meager growth rate, the future prospects look better in the backdrop of a slow but steady recovery.

They felt that although the economy is not expanding due to slack consumption and slow capital spending, the economy would continue to grow even though the growth rate may not look strong.

Japan’s economy shrank during the last three months last year, before rebounding this year although the growth has been wobbly. 

The latest growth rate puts additional pressure on Prime Minister Shinzo Abe's bid to ensure a long-lasting economic recovery.  Since his election as the prime minister in 2012, Abe has been initiating a growth plan, which is a mix of government spending, massive monetary easing and red-tape slashing. 

Several factors as evident in the Japanese economy have suggested that Japan’s economy could very well be on its way to a gradual recovery. Japan's factory output grew marginally in October, expanding now for the third month in a row, even though spending among Japanese households continues to be stagnant.

The country’s inflation also remained disappointing, with core consumer prices - that exclude volatile fresh food costs - falling 0.4% in October, and putting the Bank of Japan's 2.0% inflation target out of reach by a considerable margin.