Japan Grows at Higher Rate Than Estimate

TOKYO (Reuters) — Japan’s economy grew at a revised 1.1 percent in the third quarter from the second quarter, exceeding an initial government estimate. But that offered little comfort to policy makers wary of slowing growth in the current quarter.

The revised gross domestic product translates into annualized growth of 4.5 percent, exceeding an initial reading of 3.9 percent. It is also above the 4.1 percent rate expected by economists.

Despite the upward revision, recent weak data has underscored the view that the economy will contract slightly in the current quarter because of a global slowdown and a pull-back from the last-minute surge in stimulus-driven consumption that spurred third-quarter growth.

The Japanese government is aiming this month to compile its budget for the year from next April. It is struggling to strike a balance between shoring up a flagging economy and reining in its huge public debt, about twice the size of the country’s gross domestic product.

With little room left for the government to raise spending to stimulate the economy, analysts expect that the Bank of Japan will remain under pressure to keep its very easy monetary policy and might ease policy further if the economy slows more than expected.

“Given a slump in Japan’s auto output and a slowdown in developed economies and China, the economy will remain in a severe situation until the first half of next year,” said Takeshi Minami, chief economist at Norinchukin Research Institute.