Japan's third-quarter growth rate revised down sharply

Japanese exports Image copyright Getty Images

Japan's economy grew much slower than initially estimated in the third quarter of the year, figures have revealed, as business investment fell.

The Cabinet Office said the economy grew 1.3% in the three months to the end of September, compared to the same period a year ago.

However, that was sharply lower than the previous estimate of 2.2%.

The new data indicated that investment by companies in the quarter had been weaker than initially estimated.

Capital expenditure fell 0.4% in the quarter, as steel and real estate companies reduced investment.

However, consumer spending was revised up, while separate data showed improving sentiment in the services sector.

Currency impact

Just over a quarter of the growth came from net exports. Economists are hopeful that exports will pick up following the rise in the value of the dollar since Donald Trump's election as US president.

"With a stronger dollar and potentially higher demand in the US, companies are returning to their investment planning boards, which would fill the missing link in Japan's current recovery," said Martin Schulze from the Fujitsu Research Institute in Tokyo.

Japan's economy has been struggling for several years, raising questions about Prime Minister Shinzo Abe's strategy to revive the Japanese economy.

Mr Abe took office in late 2012, launching a growth plan that included three main elements - pumping more money into the economy, boosting government spending and cutting red tape.

But some analysts believe it is still too early to write off his policies, which have been dubbed Abenomics.

"The revised economic growth numbers are disappointing, but a new US president, a higher US dollar and a lower yen could be all it needs to tip a finely balanced Japanese economy into growth," said David Kuo, chief executive of the Motley Fool Singapore.

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