Japan’s economy failed to regain momentum in the last three months of 2013 as growth reached just a third of the level economists had forecast, raising questions about the durability of the “Abenomics” recovery.
Gross domestic product expanded at an annualised rate of 1 per cent in the quarter, the Cabinet Office said in a preliminary estimate yesterday. External trade was the weak point: a softer yen has done little to spur more exports even as it has sharply increased the cost of imported energy, helping turn Japan’s once vaunted trade surpluses into large and worsening deficits.
With trade no longer the engine of growth it was, the domestic spending that is supporting the economy will soon face a headwind of its own, with an increase in Japan’s national sales tax in April likely to hurt consumption. “Growth in October-December was totally dependent on domestic demand,” said Takuji Aida, an economist at Société Générale.