Japan's economic growth was slower than initially estimated in the fourth quarter of 2013, government data showed Monday, adding to concern that the economy may fall back at a faster pace following a consumption tax hike in April.
The world's third-largest economy expanded by an annualized 0.7 percent in price-adjusted terms in the three months through December, downgraded from an initial estimate of a 1.0 percent rise due to weaker growth in capital spending and private consumption, the Cabinet Office said.
The October-December expansion in real gross domestic product, the total value of goods and services produced at home, translated into a 0.2 percent increase from the previous quarter.
Though GDP grew for the fifth quarter in a row, the latest figure fell short of the average market forecast of an annualized 1.0 percent rise, sparking concerns that the economy may not get back on the growth path after falling back on the 3-percentage-point consumption tax hike to 8 percent next month.
Corporate capital spending, which Prime Minister Shinzo Abe's Cabinet views as key to shoring up the economy, increased 0.8 percent from the previous quarter, but was downgraded from a 1.3 percent rise reported in the preliminary data released Feb. 17.
Private consumption, accounting for roughly 60 percent of Japan's GDP, was also downwardly revised to a 0.4 percent increase from a 0.5 percent rise, against the backdrop of weaker-than-expected sales of nondurable goods including winter clothes and food, a Cabinet Office official said.
Abe has vowed to prevent the tax hike from hurting the economy by implementing a 5.5 trillion yen economic stimulus package and 1 trillion yen in tax cuts aimed at boosting investment and encouraging firms to increase wages.
The government-affiliated Japan Center for Economic Research said last week that Japan's GDP is projected to contract by as much as an annualized 4.1 percent in the April-June quarter, citing the average projection of 41 private-sector economists.
In the January-March period, the center expects the economy to grow 4.6 percent due to an expected rush in demand before the tax hike.
In the Cabinet Office's revised report for the October-December period, exports grew 0.4 percent and imports rose 3.5 percent, both unchanged from the initial data. Public investment increased 2.1 percent on the back of massive fiscal spending -- a key measure of the government's "Abenomics" policy mix -- but was downgraded from 2.3 percent growth.
In calendar 2013, the country's economy grew a real 1.5 percent, compared with 1.6 percent growth reported in the preliminary data.
Koya Miyamae, senior economist at SMBC Nikko Securities Inc., said in a report that the results for the October-December quarter are seen as "somewhat feeble" given that spending is starting to increase ahead of the consumption tax hike.
Miyamae added that it would be "almost impossible" to achieve economic growth of 2.7 percent in fiscal 2013 through March estimated by the Bank of Japan.
In nominal terms, or unadjusted for price changes, the country's economy grew 0.3 percent on quarter in the fourth quarter of 2013, downgraded from a 0.4 percent increase in the preliminary data.