Japan’s Economy Grows 2.6%

Japan’s economy slowed more than forecast in the second quarter as businesses cut investment, undermining gains in consumer and government spending that helped reduce deflationary pressures.

Gross domestic product rose an annualized 2.6 percent from the three months through March, when it rose 3.8 percent, the Cabinet Office reported today in Tokyo. Unadjusted for price changes, nominal GDP growth accelerated to an annual pace of 2.9 percent. Stocks fell as real GDP was less than the median 3.6 percent estimate in a Bloomberg News survey of 32 economists.

The report adds to the debate on whether Japan is strong enough to sustain a planned 3 percentage point bump in the sales tax in April, with Prime Minister Shinzo Abe deciding in coming months on whether to proceed. While consumers continue to propel Japan’s rebound, companies have yet to commit to the Abenomics project, paring capital spending for a sixth straight quarter.


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