Japan’s economic growth figures revised downwards
The Cabinet Office in Tokyo has today revealed that the world’s no.2 economy grew at a far slower rate in the third quarter than previous estimates showed.
According to official figures, the Japanese economy grew by 0.3% between the July and September period, rather than the 1.2% previously reported and slightly less than the 0.7% analysts had expected.
The main reason for the downward revision was due to a fall in capital investment by companies as a result of a strong yen.
Figures show that capital spending fell 2.8% in the period, though preliminary estimates had revealed a 1.6%.
Meanwhile, the news comes just a day after the Japanese Government agreed to inject a further 7.2 trillion yen ($81 billion; £48 billion) into the economy to prevent it falling back into recession.
There have been fears that the return of deflation could stall growth within the economy.
A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.
Deflation was a problem for Japan during its so-called “Lost Decade” in the 1990s in which the economy struggled with falling prices.
The yen’s recent surge to a 14-year high against the US dollar poses a threat to the recovery by making Japanese exports more expensive in the US.
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