Japan economy slows as 'Abenomics' boost fades

AP News
Posted: Nov 13, 2013 11:21 PM
Japan economy slows as 'Abenomics' boost fades

TOKYO (AP) — Japan's economy slowed in the third quarter as consumer spending remained sluggish despite government efforts to energize growth with public works and lavish monetary stimulus.

The government said Thursday that the world's third-largest economy grew an annualized 1.9 percent in the July-September quarter, half the pace of the previous quarter. The annualized growth rate was 3.8 percent in April-June and 4.3 percent in the first quarter.

Prime Minister Shinzo Abe is trying to end two decades of stagnation with his "Abenomics" prescription of easy money, a weak yen and longer-term reforms to boost competitiveness, but corporate investment and personal incomes have yet to rebound.

The preliminary data for the third quarter showed that the economy expanded 0.5 percent from the second quarter, slowing from 0.6 percent growth in April-June.

Nonetheless, top officials welcomed the latest figures as a sign Japan's economy is on its way out of deflation, as sustained falling prices that are a symptom of economic decline are known.

"We believe domestic demand is stable and the economy continues to improve," Economy Minister Akira Amari said in a statement.

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He said emergency economic measures lifted public works investment, while low interest rates and improved confidence encouraged purchases of new homes.

Consumer spending is expected to moderately increase ahead of a 3 percentage point sales tax increase to 8 percent in April, he said.

The government will push measures to ensure growth in corporate profits and investment which leads to salary increases and more employment opportunities to "ensure the path out of deflation and economic recovery."