Japan emerges from recession but growth subdued

Mon Feb 16, 2015 3:00am EST
 
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By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) - Japan's economy rebounded from recession in the final quarter of last year but growth was weaker than expected as household and corporate spending disappointed, underlining the challenge premier Shinzo Abe faces in shaking off decades of stagnation.

The annualized 2.2 percent expansion in October-December was smaller than a 3.7 percent increase forecast in a Reuters poll, suggesting a fragile recovery as the hangover from last year's sales tax hike lingered.

The preliminary reading for gross domestic product (GDP), which translates into a quarter-on-quarter increase of 0.6 percent, follows two straight quarters of contraction, data by the Cabinet Office showed on Monday.

Economic Minister Akira Amari told reporters after the data's release that the economy was on track for a recovery with signs consumer sentiment is picking up.

But analysts pointed to the weak rebound in consumption and capital expenditure as worrying signs to the outlook.

"These are somewhat disappointing figures," said Takeshi Minami, chief economist at Norinchukin Research Institute. "The situation remains weak and companies are clearly postponing investments."

BOJ ON HOLD   Continued...

 
People look at clothes at a retail store in Tokyo February 15, 2015. REUTERS/Yuya Shino