Japan economy shrinks a revised 1.2% in April-June

8 Sep 2015 | Author: | No comments yet »

Japan Economy Flashes Warning as Inventory Gain Holds Up GDP.

Gross domestic product shrank at an annualized 1.2 percent pace in the three months through June from the first quarter, less than the 1.6 percent drop reported last month, the Cabinet Office said on Tuesday in Tokyo.TOKYO (AP) — Japan’s economy contracted at a minus 1.2 percent annual rate in the April-June quarter, on higher than earlier estimated inventories and consumer demand. Businesses reduced investment more than first estimated, in a rebuff to Prime Minister Shinzo Abe’s call for Japanese companies to deploy their record cash holdings and a surge in profits into capital spending. The higher inventories and a revision in consumer spending to minus 0.7 percent instead of minus 0.8 percent as earlier estimated helped to offset weaker government and corporate investment. “The details were hardly reassuring,” Marcel Thieliant of Capital Economics said in a commentary.

Overseas, Japan is facing growing risks from a slowdown in China, its biggest trading partner. “Companies are still struggling to reduce stockpiles in the face of weak demand at home and abroad,” said Junichi Makino, an economist at SMBC Nikko Securities Inc. “The government will probably compile about 2.5 trillion yen worth of stimulus in an economic package around October,” he predicted. Now, it’s slowing again: Monthly inflation data have also slowed, to zero percent in July when looking at consumer prices excluding fresh food, one of the BOJ’s main measures.

Central bank officials are becoming less confident about Japan’s underlying economic strength, making them cautious about the outlook for a pickup in inflation, people familiar with the discussions have said this month. Etsuro Honda called for a fiscal boost of as much as 3.5 trillion yen while Koichi Hamada said further monetary easing and fiscal steps will be needed if the economy fails to grow this quarter.

BOJ Governor Haruhiko Kuroda in New York last month that the central bank can achieve its 2 percent inflation target with the current level of monetary stimulus.

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