JOC Staff | Feb 14, 2013 8:29PM EST
The Japanese economy shrank 0.1 percent in the fourth quarter of 2012 from the preceding quarter, or at an annualized pace of 0.4 percent, in real terms, the Cabinet Office said in a preliminary report on Thursday.
It was the third consecutive quarterly contraction. Most analysts had expected slight growth in the Japanese economy in the quarter.
Growth in the Japanese economy, as measured by gross domestic product, remained stuck in negative territory, as a slowdown in overseas economies hit the nation’s exports.
Japan’s exports fell for the second quarter in a row in the October-December period, tumbling 3.7 percent on a quarter-on-quarter basis. But the pace of decline was slower than it had been in the third quarter of 2012.
Japan is now the world’s third-largest economy after the United States and China and is heavily dependent on exports for growth.
Consumer spending, which accounts for nearly 60 percent of Japan’s GDP, rose 0.4 percent in the fourth quarter after dropping 0.5 percent in the third on a quarter-on-quarter basis.
Amid the continued slowdown in exports, corporate capital investment declined for the fourth straight quarter, sinking 2.6 percent on a quarter-on-quarter basis.
Public investment continued to show solid growth, increasing 1.5 percent on a quarter-on-quarter basis, due to demand related to ongoing reconstruction efforts resulting from the devastating earthquake and tsunami that hit northeastern Japan in March 2011.
In nominal terms, or before adjustment for price changes, the Japanese economy shrank 0.4 percent in the October-December period on a quarter-on-quarter basis, or at an annualized pace of 1.8 percent, amid continued deflation.
The fourth quarter figures showed that the Japanese economy remains mired in a recession, which is commonly defined as two consecutive quarters of GDP decline.
But Akira Amari, the economic and fiscal policy minister, struck an optimistic tone about the future direction of the Japanese economy, citing the fact that the pace of decline in GDP was much slower than in the third quarter of 2012.
The nation’s GDP shrank 1.0 percent in the July-September quarter from the preceding quarter, or at an annualized pace of 3.8 percent.
“The Japanese economy is expected to make a moderate recovery, thanks to the effects of the Bank of Japan’s monetary easing and the government’s recent stimulus package and also thanks to an anticipated mild recovery in the global economy,” Amari said in a statement.
