Japan’s economy grows less than expected

Tokyo, Japan (AFP) — Japanese growth slowed significantly in the third quarter of the year, according to government data released on Thursday, sparking concerns for the health of the world’s third-biggest economy.

The economy expanded 0.1 percent between July and September, a slowdown from the 0.4 percent seen in the previous period, and much weaker than economists had forecast.

A drop in exports amid ongoing global trade tensions outweighed growth in domestic demand, the government said.

Analysts had expected a stronger pace of growth in the third quarter as consumers rushed to make purchases before a consumption tax hike from eight percent to 10 percent on 1 October.

Japan’s household spending surged 9.5 percent year-on-year in September, according to official data released last week, as consumers rushed to complete purchases of furniture and other big-ticket items ahead of the rate rise.

But Kentaro Arita, senior economist at Mizuho Research Institute, told AFP: “The pre-tax shopping spree was not that strong, suggesting that the Japanese economy is not strong enough to maintain a sustainable recovery.”

He predicted the economy would go into reverse in the fourth quarter as consumption slows after the tax hike.

Weak exports partly reflected worries over the US-China trade war, but if the fourth round of tariffs (by the US) is pushed back as expected, they will likely pick up, Arita forecast.