Page last updated at 07:03 GMT, Wednesday, 5 March 2008

Japanese firms slash investment

Toyota factory
Economists say the government will cut its economic growth estimates

Investment by Japanese companies fell at the fastest pace in five years in the last quarter of 2007, according to the Ministry of Finance.

Capital expenditure declined 7.7% in the three months to the end of December, a much bigger fall than economists were expecting.

Analysts say the report will force the government to reduce its estimate of fourth quarter growth next week.

The government's initial growth estimate was 0.9%.

"We still need to crunch numbers to be sure, but Japan's October-December GDP may be revised down to negative growth given the weak capital spending figures," said Naoki Lizuka, a senior economist at Mizuho Securities.

Information technology and leisure companies showed the weakest investment.

But manufacturing companies showed a slight increase in spending.

The Bank of Japan reviews interest rates on Thursday and Friday, but it is not expected to cut interest rates.

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