Japan downgrades April-June GDP to 1.3%

Bloomberg TOKYO (Bloomberg) — Japan’s economy expanded at a slower pace in the second quarter than initially reported, as growth in business investment proved less robust than first thought.

Gross domestic product grew at an annualized pace of 1.3 percent in the three months through June from the previous quarter, revised Cabinet Office data showed Monday, with strong consumer spending the main driver of the expansion. That compared with a preliminary reading of 1.8 percent. The revised figure matched analysts’ median estimate.

Economists had expected overall growth to be smaller than first estimated after finance ministry figures released last week showed manufacturers cutting back on business investment as escalating trade tensions darken the global outlook. That contrasts with the stance of more domestic-oriented non-manufacturers, which are continuing to ramp up capital spending as they automate processes to cope with a labor shortage.

Consumer spending has helped power growth this year as exports have fallen due to a slowing global economy and the U.S.-China trade war. Private spending is expected to continue showing strength through the third quarter, before taking a hit from a sales-tax increase in October.

The U.S.-China trade war is casting a shadow over the global outlook, and by extension the prospects for continued growth in Japan’s trade-dependent economy. Japan is also keen to clinch a trade deal with the U.S. that would avert tariffs on auto imports.

Still, Japan’s economy has continued to expand despite gloomy forecasts from economists expecting the global slowdown to buckle growth. While the export sector and manufacturers are showing signs of strain, domestic demand and investment by non-manufacturers remain solid for now.Speech

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