Capital spending by Japanese firms dropped 3.9 percent from a year earlier in the first quarter of 2013, as companies remained wary of the outlook for the country’s economy despite the weaker yen and budding hopes of a recovery in exports, the government said Monday.
Business investment by all nonfinancial sectors for purposes such as building plants and introducing new equipment fell for the second straight quarter in January-March. It totaled 11.39 trillion yen ($113.39 billion) during the three months, the Finance Ministry said.
Growth in domestic demand, along with higher private capital spending, is vital for Prime Minister Shinzo Abe’s government to achieve its goal of overcoming nearly two decades of deflationary recession, analysts said.
Whether Abe’s administration can produce effective measures to encourage the corporate sector to spend more money through deregulation and structural reform in its economic growth strategy, to be finalized in mid-June, will be closely watched, they added.
On a quarter-on-quarter basis, capital spending, excluding investment in software, slid a seasonally adjusted 0.9 percent from the October-December period.
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