TOKYO – Japan's economy grew at a slower pace than earlier estimated in the July to September quarter, expanding at an annual pace of 1.3 percent.
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The figure released Thursday downgraded a preliminary estimate of 2.2 percent annual growth in the last quarter. Quarterly growth was 0.3 percent, down from the earlier reported 0.5 percent.
The figures were below what analysts were expecting, but still showed three straight quarters of growth.
The downgrade reflects a 0.4 percent drop in business investment from the previous quarter. Originally it was reported as flat. Exports grew 1.6 percent, below the 2.0 percent earlier figure.
Japan has yet to attain the strong momentum Prime Minister Shinzo Abe promised with his economic platform, which has mostly relied on massive asset purchases by the central bank. The country remains far from the 2 percent inflation target set by Abe and the Bank of Japan.
But economists say that the sustained expansion and a recent weakening in the yen versus the dollar, which should help exports.
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That means the central bank is likely to keep its current lavish monetary easing intact, without pushing interest rates further into negative territory, said Marcel Thieliant of Capital Economics.
"Firms' predictions for industrial production suggest that the economy continued to expand at a solid pace in the current quarter. Our forecast is that GDP will grow by 1% next year," he said.
The government also revised annual estimates of gross domestic product for 1994-2015, raising figures across the board based on a 2011 benchmark year. The revision put Japan's GDP in 2015 at 530.5 trillion yen ($4.66 trillion), up from the earlier figure of 499.3 trillion yen.
The newest data reflect a new calculation method based on revised international standards. They include research and development costs, patent royalties and purchases of defense equipment that previously were not part of the calculations.
The U.S., Australia and many European countries have been using the new method for years.
Though the revised figures do not reflect any actual change in Japan's sluggish economic reality, since they boost the overall GDP figure they are a "substantial windfall" from a political point of view, Masamichi Adachi of JPMorgan said in a research note.
The higher number pushes Japan closer toward Abe's goal of attaining a 600 trillion yen ($5.3 trillion) nominal GDP. It also improves Japan's gross debt-to-GDP ratio, which at more than twice the size of the economy is the biggest among major industrial countries.