Capital spending boosts Japan economy amid disaster risks: government

15-Sep-2018 Intellasia | Mainichi | 6:00 AM Print This Post

Japan’s economy is on firm footing driven by robust capital expenditure, but a recent string of natural disasters pose downside risks to growth, the government said Friday.

“Business investment is increasing,” the Cabinet Office said in the September edition of its monthly economic report, an upgrade from the previous month when it said spending on factories and equipment was only rising moderately.

Japanese companies have been ramping up such spending, either to increase production capacity to meet strong demand or to improve efficiency to combat a severe labour crunch in the country.

The office meanwhile maintained its headline assessment of the world’s third-largest economy, saying it is “recovering at a moderate pace.”

Private consumption, accounting for more than half of economic activity, is picking up, it said.

But the report also warned that massive flooding in parts of western Japan, which killed more than 220 people in July, as well as a typhoon that ripped through Osaka and strong earthquake in northern Japan, could hurt the economy down the line.

Government data released earlier this week showed Japan’s economy grew an annualised real 3.0 percent in the April-June quarter, much quicker than the 1.9 percent initially reported.

Economists expect growth to slightly slow in the July-September quarter due to supply chain disruptions caused by the disasters.

“Consumer prices are rising at a slower tempo,” the report said, reflecting recent weak data that have frustrated the Bank of Japan’s push to lift year-on-year inflation to 2 percent, the level the central bank sees as consistent with a healthy economy.

Core consumer prices, which exclude fresh food because of its volatility, rose just 0.8 percent in July.


Category: Japan

Print This Post

Comments are closed.