Japan third-quarter GDP growth lowered to 5.6%
Japan said Friday the economy grew at a slower pace in the third quarter than initially estimated, with the fragile post-quake recovery weighed by a strong yen and the eurozone debt crisis.
The Cabinet Office said the economy expanded by an annualised 5.6 percent in the July-September quarter -- lower than the 6.0 percent announced last month -- with a government spokesman saying growth was "moderating."
However, the figure represents Japan's first economic expansion in three quarters, as the country recovers from the March 11 quake and tsunami disaster with manufacturers ramping up production.
And the monthly outcome still beat analysts' expectations for a revised 5.2 percent gain, according to Dow Jones Newswires.
On a quarter-on-quarter basis, gross domestic product growth was 1.4 percent in July-September, revised down from 1.5 percent, the figures showed.
Authorities have been cautious about the prospects for Japan's economy, saying weakness in key US and European export markets could dash hopes for a sustained recovery.
"The data confirmed that business sentiment has been dampened by a stronger yen and uncertainties about the global economy," said Satoshi Osanai, economist at the Daiwa Institute of Research.
The downward revision was expected after the government said last week it was lowering its capital spending estimate, a key figure in calculating gross domestic product.
On Thursday, official data showed Japan's core private-sector machinery orders, a leading indicator of corporate capital spending, fell 6.9 percent in October from the previous month.
Economists were also concerned that private consumption, which accounts for about two-thirds of Japan's GDP, was revised down to a 0.7 percent on-quarter rise, from an initial estimate for a 1.0 percent increase.
Rising inventories were also "worrisome" for the world's third-largest economy, said Mizuho Research and Consulting senior economist Norio Miyagawa, as they suggest a manufacturing slowdown.
A worsening situation in debt-strapped Europe would "pose a great downside risk to Japan," he said.
Credit Suisse said the chopped growth figure "indicates the possibility that post-disaster reconstruction demand was weaker than expected and that business sentiment worsened sharply due to the yen's appreciation and other factors."
The investment bank said Japan's economy would likely contract by an annualised 2.0 percent in the fourth quarter, before mounting a "mild" recovery early next year on the back of a stronger global economy.
Last month, Bank of Japan governor Masaaki Shirakawa warned the country would continue to face a "severe situation" and that Europe's sovereign debt crisis was the biggest risk factor in any recovery.
The crisis has also been a key issue behind Japan's surging yen, which investors have flocked to as they seek a safe-haven currency.
The yen's rise to post-World War II highs against the dollar has prompted the central bank to intervene in foreign exchange markets to bring down the unit's surging value, which erodes exporters' profits and makes Japanese goods less competitive.
Japan fell into a trade deficit in October, reversing a year-earlier surplus, as the eurozone crisis and yen weighed on exporters, while record flooding in Thailand pounded the operations of Japanese automakers and electronics firms with plants in the country.
The flooding came as Japanese firms were near to restoring output to normal levels at home after the quake-tsunami shattered component supply chains.
© 2011 AFP