Japan’s fourth quarter GDP dwindles on firms’ restricted spending

Japan’s economic momentum decelerated at a slower-than-initially-reported pace from October to December. The decline came mainly from firms’ restricted spending on plant and equipment and their decision to cut inventories as the coronavirus crisis dragged demand.

Data from the Cabinet Office showed that the economy recorded an annualized 11.7% expansion in the fourth quarter. The jump came milder than the 12.7% year-on-year growth and lower than the 12.8% jump expected by economists.

Capital spending advanced 4.3% from the previous quarter, placing lower than the initial reading of 4.5% jump. The reading failed to breach expectations, while a sharp contraction seen in private inventories and capital expenditure stood as the primary factors for the country’s weak GDP.