Japan's economic growth was weaker than first estimated in the fourth quarter, underscoring a patchy recovery in the world's No. 2 economy.
Gross domestic product expanded at an annualized pace of 3.8 percent in the October-December quarter, the government said Thursday, revised down from the 4.6 percent in a preliminary report last month. The new figure was generally in line with market forecasts.
Slightly lower business spending and a big drop in inventories — which suggests companies are letting stocks of goods deplete in anticipation of weak demand — drove the GDP revision.
The updated calculations by the Cabinet Office revealed that companies spent slightly less than expected on factories and equipment. Capital expenditures expanded by 0.9 percent, down from an initial reading of 1 percent.
The results show Japanese companies remain conservative with spending, focusing instead on cutting costs and recovering profits despite growth in China and elsewhere in Asia.
Private inventory dragged GDP, which measures the total value of a nation's goods and services, lower by 0.1 percentage point. The government had estimated in February that inventory pushed up GDP by 0.1 point.
The revision, however, does not change the overall picture of Japan's economy — still shaky but probably strong enough to avoid another recession.
"Going forward, the self-sustainable power in the economic recovery would be the key to watch," said Keisuke Tamura, a parliamentary secretary at the Cabinet Office, according to Kyodo News agency.
Japan's economic growth is expected to slow this quarter amid deepening deflation, cuts in public works and the fading impact of stimulus measures.
But Goldman Sachs economist Chiwoong Lee said the economy should regain some momentum later this year. Robust exports will likely strengthen capital expenditures, and families will have more money to spend after they start receiving child allowances from the government.
The annualized GDP figure corresponds to quarterly growth of 0.9 percent. For the 2009 calendar year, the GDP contracted by 5.2 percent, worse than the 5 percent initially projected by the Cabinet Office.
The government also said GDP in the July-September quarter actually shrank, the latest change in an embarrassing series of revisions that raised questions about the reliability of the government's numbers.
In its initial report, the Cabinet Office said third quarter GDP posted a robust 4.8 percent annualized growth. The figure was slashed to 1.3 percent several weeks later, than a meager .01 percent last month. Now, the government says GDP contracted 0.6 percent.
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