Tokyo, Japan (4E) – The Japanese economy expanded at a slower than expected pace in the last three months of 2013, providing risks to the country’s recovery as a sales-tax increase takes effect in April.
Japan’s gross domestic product (GDP) rose 0.3 percent in the three months ended Dec. 31 from the previous quarter, according to the Cabinet Office’s preliminary reading released Monday, rising for the fourth consecutive quarter. The headline figure was lower than economists’ forecasts 0.7 percent gain, and comes after 0.3 percent gain in the third quarter.
While capital spending jumped by the most in the last two years and consumption increased, expansion was still hit by trade deficits due to rising imports and weaker exports. Lower-than-anticipated growth could prompt the Bank of Japan to increase its stimulus in coming months, providing more challenge to Prime Minister Shinzo Abe to introduce new policies to make the economy more competitive.
Nominal GDP increased 0.4 percent, missing estimates for a 0.8 percent gain after rising a revised 0.2 percent in the previous three months that was initially estimated at 0.3 percent. Capital expenditure inched up 1.3 percent, rising for the third consecutive quarter, although it missed estimates for a 1.8 percent increase after advancing just 0.2 percent in the third quarter.
The GDP is forecast to decline 4.1 percent at an annualized basis in the April quarter, when the sales tax will increase to 8 percent from 5 percent, according to a separate survey by Bloomberg News.