Tokyo, Japan (4E) – The Japanese economy expanded at a slower-than-expected pace in the fourth quarter and recorded a new record-high current-account deficit in January, evidence that that the economy could face tough time in the coming months.
On an annualized basis, the country’s gross domestic product (GDP) climbed just 0.7 percent from the previous three months, according to the Cabinet Office report released Monday in Tokyo. The figure is lower than the previous reading of 1 percent and the median forecast by 20 economists surveyed by Bloomberg News who called for a 0.9 percent expansion.
The report also showed that the current-account deficit increased to 1.59tn yen ($15.4bn), a new record since the government started gathering data in 1985, according to the finance ministry.
The result provides new challenges for Prime Minister Shinzo Abe as economists had until recently predicted solid growth in the months before the sales tax is raised to 8 percent in April that is expected to result to a downturn.
Economists also predict that the Bank of Japan will expand its easing policies to keep its target of 2 percent inflation rate for the world’s third-largest economy.
In the fourth quarter, business investment rose 3 percent on an annualized basis, compared with an initial estimate of a 5.3 percent gain. Consumer spending climbed 1.6 percent on an annualized basis, which was revised downward from a preliminary reading of 2 percent increase.