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Japan’s economy grew only by 0.3% between April and June, which is two times less than expected and is mainly due to delayed recovery in consumer spending, reported Reuters. Published on Monday data provide new evidence of slowing of the global economy after growth in the U.S., China and Europe has not reached expected levels.
Analysts had expected gross domestic product (GDP) of Japan to grow by at least 0.6 percent on a quarterly basis after the first quarter was achieved strong growth of 1.3%. And state subsidies for low-emission cars brought growth in consumer spending to their highest level in three years.
Despite the slowdown, economic growth last quarter was above the average for the last decade, a level of 0.24%. Therefore, the Finance Minister Motohisa Furukava said that the economy is growing at healthy pace and the slowdown is largely the effect of unusually high growth the previous quarter. “Upward trend in the Japanese economy continue, driven by domestic demand,” he said, but added that the government should consider providing additional incentives “if necessary”.
“The European debt crisis remains a high risk for Japan and the global economy. Bank of Japan will probably now take wait position, but is likely to take action next month if the financial turmoil and a new printing of money from the U.S. Federal Reserve lead to a new appreciation the yen, which will make additional exports and recovery, “said Tatsushi chicane, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
However, figures show that growth in private consumption, which represents about 60% of GDP, slowed to only 0.1% in the second quarter. In the first three months of the year the increase was 1.2 percent. This strong doubts as to whether delaying wakes upward momentum will be maintained after the effect of government incentives pass. Subsidies for cars with low emissions expire in August. These concerns are already reflected in consumer confidence, which has worsened in July compared to June
“Domestic demand is losing momentum, while exports are likely to weaken because of debt problems in Europe. It is likely that Japan’s economy to fade again in the third quarter,” said Yoichi Kodama, chief economist at Meiji Yasuda Life Insurance.
On an annual basis, the third largest in the world economy grew by 1.4% in the second quarter, well below forecasts of 2.5 per cent. The U.S. economy also slowed down during your recovery and economic growth in China fell to 7.6 percent from 8.1 percent in the first three months of the year. Most economists expect the euro to take account of economic contraction of 0.2% in the second quarter.