The economic growth of Japan has stalled in April-June after an impressive expansion in the previous quarter amid a decline in exports and capital spending, pointing to the need for further measures by the authorities of the country to ensure a more sustainable growth.
The third largest economy in the world in the second quarter grew by 0.2 % in annual terms, showed government data on Monday. GDP growth was below the average forecast of analysts, who expected an increase by 0.7 %, and significantly slowed down compared with a 2.0 % growth in January-March, according to revised data.
In quarterly terms, the GDP growth in the April-June showed no changes, while analysts on average predicted an increase of 0.2 %.
Private consumption, which accounts for about 60 % of economic activity, rose 0.2 %, coinciding with the forecast of analysts, but slowed down after rising 0.7 % the previous quarter.
Capital expenditures decreased by 0.4 % after contracting 0.7 % in the first quarter, according to data, suggesting that uncertainty about the future of the world economy keeps companies from increasing spending.
Foreign demand has taken away from GDP growth 0.3 % points, indicating how much the slowdown in world economic growth affects an export-dependent economy.
The fall of the exports in April-June was 5.9%, based on annual rates. Demand for Japanese goods weakened markedly in the United States and Europe. According to experts, the strengthening of the yen against other major currencies had a negative impact on exports. Since the beginning of the year, the yen has risen by 16% against the US dollar.
At the same time, investment in housing construction jumped by 5.0 %, showing the fastest rate of growth since 2011, partly due to the super soft monetary policy of the Bank of Japan, which resulted in decreased cost of mortgage loans.
"Thus, only government spending and residential investment have advanced the economy, while the other components remained weak, apparently going through a period of stagnation.", - said a senior economist at SMBC Friend Securities, Marie Iwashita.