Page last updated at 10:14 GMT, Wednesday, 9 December 2009

Japan's economic growth figure lowered

Japanese Prime Minister Yukio Hatoyama
The Japanese government unveiled a new stimulus plan on Tuesday

Japan's economy expanded by much less than first estimated in the July to September period, revised official figures have shown.

The economy only grew at an annualised rate of 1.3% during the third quarter, down from the previous estimate of 4.8%, said the Cabinet Office.

The main reason for the change was a sharp downward revision in the amount companies had invested in new assets.

The figures come a day after the government agreed a new stimulus deal.

The recently elected government of Prime Minister Yukio Hatoyama said it would spend 7.2 trillion yen ($81bn; £48bn) on measures to bolster employment, extend incentives for energy efficient products, and provide loan guarantees to help small and medium-sized businesses.

The previous government had unveiled a similar 15.4tn yen economic stimulus package in April.

Deflation worries

Compared with the preceding quarter, the Japanese economy expanded by just 0.3% between July and September, down from an initial estimate of 1.2%.

I still expect the economy to continue a steady recovery towards next year on the back of a recovery in the global economy
Tatsushi Shikano, Mitsubishi UFJ Securities

The Cabinet Office said the main reason for the economy-wide fall was capital investment by companies - the amount they spend on new assets - being revised down for the quarter to a contraction of 2.8%, from the original estimate of 1.6% growth, in the face of the stronger yen.

The yen recently hit a 14-year high against the dollar, making Japanese exports more expensive in the US.

Japan is also struggling again with deflation, which last month the government said had returned for the first time since 2006.

Deflation means that prices are falling. It is bad for an economy as it puts consumers off from making purchases, leading to a vicious circle of decreased spending and increased unemployment.

Mr Hatoyama admitted on Tuesday that the Japanese economy still faced challenges, despite exiting recession in the April to June quarter.

"As the Japanese people are already feeling, the economy is not necessarily doing fine," he said.

"I would like to take appropriate economic policies going forward."

Despite the downward revision to the growth figures, Tatsushi Shikano, a senior economist at Mitsubishi UFJ Securities, said he still expected growth to continue.

"Although the third-quarter figures were revised down sharply as expected, I still expect the economy to continue a steady recovery towards next year on the back of a recovery in the global economy," he said.



Print Sponsor


SEE ALSO
Japan in $81bn stimulus package
08 Dec 09 |  Business
Japan says deflation has returned
20 Nov 09 |  Business
Japan's economy continues growing
16 Nov 09 |  Business
Japan's economic battle with deflation
23 Mar 09 |  Business
What is deflation?
01 Dec 08 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites

FROM OTHER NEWS SITES
Reuters UK UPDATE 1-Japan govt not bound by Y44 trln JGB cap -spokesman - 1 hr ago
Finance 24 Japan recovery stumbling - 4 hrs ago
Business Day Japan fails to meet growth expectations as capital investment falls 2,8% - 5 hrs ago
China Post Japan GDP revised down; policy response in doubt - 6 hrs ago
The Independent Japan slashes growth forecasts for Q3 - 10 hrs ago



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific