Japan downgrades Q2 GDP as trade war hits business investment, Latest Business News - The New Paper

Japan downgrades Q2 GDP as trade war hits business investment

This article is more than 12 months old

TOKYO: Japan's economy grew at a slower pace than initially estimated in the second quarter as the US-China trade war prompted a downward revision of business spending, intensifying calls for the central bank to deepen stimulus this month.

Weakness in the global economy and worsening trade protectionism have emerged as risks to growth and added some pressure for the Bank of Japan to expand stimulus when it meets next week.

The economy grew an annualised 1.3 per cent in April-June, revised Cabinet Office data showed yesterday, weaker than the preliminary reading for 1.8 per cent annualised growth and in line with economists' median forecast.

The annualised growth rate translates into a quarter-on-quarter expansion of 0.3 per cent from January-March, compared with a preliminary reading for a 0.4 per cent gain.

"There's a possibility growth will turn negative in the October-December quarter," said Mr Izuru Kato, chief economist at Totan Research.

"If worries about such negative growth deepen (in the coming months), the Bank of Japan could consider lowering interest rates further into negative territory."

Capital spending rose just 0.2 per cent from the previous quarter. - REUTERS