TOKYO • Japan returned to growth in the final quarter of 2018, but that did little to ease concerns about the effects of softening external demand on its export-dependent economy.
Business investment and consumer spending did most of the heavy lifting as the economy expanded an annualised 1.4%, matching economists’ estimates for a modest rebound from a sharp contraction during a natural disasterhit third quarter.
Exports grew only 0.9% from the previous quarter, less than the size of the decline when typhoons and an earthquake hit output.
With growth slowing in China and elsewhere, Japan is likely to follow suit.
“Exports were supposed to show a big jump after the previous fall, but they just limped along,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“If you average all the data out, Japan’s economy is clearly slowing.”
With imports rising more than outbound shipments, trade shaved 0.3 percentage point off the overall economic expansion, matching the largest chunk taken out of growth in the last five years.
Economy minister Toshimitsu Motegi said slowing growth in China, and in particular its softening demand for tech-related items, contributed to the weakness in exports.
He flagged the direction of the Chinese economy and the US-China trade battle as risks to the government’s baseline view that Japan will maintain a mode-rate expansion. — Bloomberg