A general view with Tokyo Tower is pictured in Tokyo, Japan March 12, 2020. REUTERS/Hannibal Hanschke
TOKYO – Japanese companies raised spending on plants and equipment in April-June but the pace of annual gains slowed to the lowest in five quarters, the Ministry of Finance (MOF) said on Friday, reflecting global recession worries amid China’s slowing growth.
Fears of a global downturn are clouding the outlook for export-reliant Japan, the world’s third-largest economy, as sharp interest rate hikes in the U.S. and Europe and surging inflation threaten to stymie demand. China, Japan’s largest trade partner, is battling a deepening property crisis as well.
Capital expenditures rose 4.5 percent in the second quarter from a year earlier, the slowest growth since the start of 2022, and fell 1.2 percent on a seasonally-adjusted quarterly basis, the MOF data showed.
The capex data will be used to calculate revised gross domestic product figures due on Sept. 8.
A preliminary estimate indicated that Japan’s economy expanded at an annualized clip of 6.0% in the second quarter, driven by global demand.
But analysts said the expansion appeared somewhat softer than the headline figure suggested, partly because it was caused by weaker imports reflecting tame domestic demand.
Still, car exports rebounded after a pullback in micro-chip shortages and the reopening of inbound tourism offset sluggish private consumption and capital expenditures, preliminary GDP data showed last month.
On the quarter, the capex component of the second quarter GDP stalled while exports grew 3.2 percent. Private consumption that accounts for more than half the economy fell 0.5 percent, while imports tumbled 4.3 percent.
Friday’s MOF capex data also showed corporate revenues rose 5.8 percent quarter on quarter, and recurring profits increased 11.6 percent in the April-June quarter from the same period a year ago.