AFTER STRONG GROWTH IN FIRST HALF OF 2013, JAPANESE ECONOMY HITS A SNAG
c.2013 New York Times News Service
TOKYO — After a surprising spurt of strong growth in the first half of the year, the Japanese economy seems to be running out of steam as exports and consumer spending show signs of weakening.
Preliminary figures released Thursday indicated that growth in Japan’s gross domestic product slowed to an annualized rate of 1.9 percent in the third quarter of 2013, down from 3.8 percent in the second quarter. Growth had benefited from a bold monetary and fiscal push by Prime Minister Shinzo Abe’s government to stimulate the economy.
The latest growth rate exceeded the average 1.6 percent rate predicted by a Nikkei poll of economists, who also forecast growth to pick up somewhat in the fourth quarter. Still, the recent slowdown takes some of the shine off what had been a bright spot for an otherwise lackluster year for the global economy. On a quarterly basis, the Japanese economy grew 0.5 percent from the previous three months.
A slowing economy puts more pressure on Abe to deliver on his much-promoted effort to improve Japan’s long-term growth prospects. Recent delays on measures that would liberalize Japan’s labor market or level the playing field for Internet-based startups have raised questions over how committed Abe remains to his proposals, especially when they encroach on powerful vested interests.
One reason for the recent slowdown was a drop in net exports. Ever since Japan was effectively forced to close its nuclear reactors after the Fukushima nuclear disaster in 2011, its energy import costs have soared, hurting its balance of trade. And exports to Asia slowed amid concerns over growth there.
In the three months to September, however, a surge in smartphone shipments to Japan also made a dent in its trade balance. The popularity in Japan of Apple’s new iPhone 5S is likely behind that jump in shipments, Kyohei Morita, a Barclays chief economist, wrote in a report this week. Imports grew by 2.2 percent, while exports fell 0.6 percent, according to figures released by the government’s Cabinet Office.
A slowdown in private consumption to just 0.1 percent growth, down from 0.6 percent in the previous quarter, was also behind the falloff. A breather from the feverish stock market rally that hit Tokyo in the first half of the year has slowed luxury purchases. More worrisome, companies have been averse to start raising wages despite a rebound in their profits, a reluctance that Abe has taken to complaining loudly about.