TOKYO (AP) — Japan’s economy expanded at a slower-than-expected 1 percent annualized rate in the last quarter of 2013, raising pressure on the central bank to step up already massive stimulus to sustain the recovery.
The data released Monday showed a 0.3 percent expansion from the previous quarter, adjusted for inflation. That was less than half of some forecasts despite a boom in housing construction and stronger public and private spending.
Slower growth in China and other major markets has taken a toll on exports, crimping growth at a critical time for Prime Minister Shinzo Abe’s recovery program.
“The big disappointment was net exports, which shaved off 0.5 percentage points from headline growth,” Capital Economics said in a commentary Monday.
It was the fourth straight quarter of expansion since the economy emerged from recession in late 2012, and gained momentum on a combination of strong government spending and aggressive monetary easing.
The Bank of Japan’s monthly monetary policy meeting begins Monday. Ahead of the release of the latest data, the central bank had been expected to keep monetary policy unchanged, while promising more stimulus if necessary to cushion the blow to consumer and corporate demand from a 3 percent sales tax hike that takes effect April 1.
Economists expect the tax hike to cause the economy to contract in April-June after expanding in this quarter, as consumers move up purchases to beat the tax hike and then tighten their belts afterward to compensate for higher costs.