TOKYO, Japan (AFP) — Japan’s economy grew less than initially thought in the first quarter, revised government data showed Thursday, but the weaker-than-expected numbers still confirmed the longest expansion in over a decade.
The world’s number three economy posted 0.3 percent growth between January and March — or 1.0 percent at an annualized rate — which was down from a preliminary 0.5 percent growth estimate.
The unexpected downgrade was also below market expectations for an upward revision to 0.6 percent growth.
The surprise cut comes after the International Monetary Fund and World Bank both recently lifted their projections for Japan’s economy.
Still, the official figures also meant that Japan saw its fifth straight quarter of growth in what is its longest economic expansion in more than a decade.
The economy has been picking up steam on the back of strong exports as the global economy recovers and demand for Japan-made products rises.
Investment linked to the Tokyo 2020 Olympics is also giving the economy a shot in the arm.
But the government and the Bank of Japan (BoJ) are still struggling to achieve a clear break from years of on-off deflation.
Consumer prices remain way below the BoJ’s 2.0 percent inflation target.
The target is a cornerstone of efforts to reverse years of slow growth that followed the collapse of an equity and property market bubble in the early 1990s.
Falling prices can discourage spending by consumers, who might postpone purchases until prices drop more or look to save money instead.
Deflation puts pressure on businesses, creating a cycle in which firms then cut back on expanding production, hiring new workers or boosting wages.
Japan’s jobs market is tight with unemployment rate staying at a 23-year low of 2.8 percent.
But this ultra-low jobless rate has failed to give a significant boost to wages, however, as it is mostly due to a shrinking labor force and an increase in lower-paid temporary work.
Private spending, which accounts for more than a half of Japan’s Gross Domestic Product, remains lackluster, as cash-rich firms have been reluctant to usher in big pay hikes.
The labor ministry said Tuesday that inflation-adjusted April wages were flat from a year earlier.
© Agence France-Presse
