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Japan economy's return to growth weaker than thought
[TOKYO] Japan's economy grew less than initially thought in the final quarter of 2014, revised government data showed Monday, revealing an even weaker emergence from recession than previously believed.
The poor data could put the Bank of Japan under pressure to launch more stimulus, economists said, as the world's third largest economy struggles to rid itself of two decades of lassitude.
The Cabinet Office said the economy expanded just 0.4 per cent in the October-December period from the previous quarter, down from an initial estimate of 0.6 per cent growth, with corporate capital investment shrinking.
Despite the downgrade, the data still confirmed the Japanese economy had crawled out of recession at the end of 2014, after two consecutive quarters in which gross domestic product (GDP) contracted.
"The result showed that Japan's economy bottomed out from a 'technical recession' following the April VAT hike in October-December quarter, while the pace of recovery was still limited," Credit Suisse economists said in a note.
Japan's economy stuttered last year after an April sales tax rise cut off the flow of consumer spending, which had shown healthy growth until then.
Monday's figures, if annualised, show GDP growth revised down to 1.5 per cent from the previous figure of 2.2 per cent.
That places Japan well behind the United States, where revised data showed the economy growing an annualised 2.2 per cent in the fourth quarter.
Over the full calendar year the Japanese economy logged zero growth, a significant slowdown from an expansion of 1.6 per cent in 2013.
Capital Economics said the revised GDP data support the case for more easy cash from the central bank.
"We still think that the Bank of Japan will announce more stimulus next month" to achieve its inflation target of 2.0 per cent, said Marcel Thieliant, Japan economist at Capital Economics.
Sustained inflation is a key measure of Prime Minister Shinzo Abe's pro-spending growth blueprint, dubbed Abenomics, which was set in motion in late 2012, sending the yen plunging and boosting stock prices.
The central bank expanded its already massive asset-purchasing programme in October.
But Japan's inflation rate has now dropped to its lowest level since just after Abenomics was unleashed.
Core inflation in January came in at 2.2 per cent, but once the effect of the tax hike is stripped out, prices were seen squeaking up just 0.2 per cent from a year earlier, the worst reading since a zero per cent rate in May 2013.
While they've not helped the inflation cause, lower oil prices have combined with a fall in the value of the yen to bolster Japan's current account balance - the broadest measure of trade with the rest of the world, including trade in goods and services as well as tourism and returns on foreign investment.
Data released Monday from the finance ministry showed Japan posted a current-account surplus of 61.4 billion yen (US$508 million), reversing the year-before deficit of 1.59 trillion yen.