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By APD writer Alice
The Japanese economy expanded only 0.1 percent in the third quarter of 2019, down from the 0.4 percent growth recorded in the previous period and much lower than those forecast by economists.
The lower-than-expected economic growth was blamed for a drop in exports amid ongoing global trade tensions that pulled domestic demand down.
Earlier, analysts had expected a stronger pace of growth in the third quarter as consumers rushed to buy goods before consumption tax hike from 8 percent to 10 percent on October 1.
Although Japan's household spending surged 9.5 percent year-on-year in September, the economy still suffered a slowdown.
Economists also said that the Japanese economy is not strong enough to maintain a sustainable recovery and will go into reverse in the fourth quarter as consumption slows after the tax hike.
A slowdown in the IT sector is in the process of bottoming out, which could provide a pep to the economy in the fourth quarter, they added.
However, they voiced their belief that the economy would ride out the storm next year as it receives a likely boost from the Tokyo Olympics.
Prime Minister Shinzo Abe's government twice delayed implementing the consumer tax hike over fears that it could hit the country's fragile economic growth. But the hike went ahead as planned on October 1.
Historically, Japan's economy has hard hit by tax hikes. Both of the most recent increases – from 3 percent to 5 percent in 1997 and then to 8 percent in 2014 – led to recessions.
(ASIA PACIFIC DAILY)
