Slower Corporate Spending Raises Fears For Japan's GDP

Dec. 4, 2006
Rate slows to 12% from 16.6% a year ago.

Japan said Dec.4 that corporate investment slowed from its recent breakneck pace in the three months to September, raising fears of a downgrade in economic growth for the quarter. The Ministry of Finance said combined corporate capital spending rose 12% year-on-year between July and September as big businesses continued to build and upgrade factories.

The index, determined by surveying close to 25,000 big companies, was up for the 14th straight quarter, but it was down from a 16.6% year-on-year increase in the quarter to June which was the fastest rise on record.

The government uses the quarterly corporate survey to fine-tune its Gross Domestic Product data. Revised GDP data for the quarter to September is due out Dec. 8. The preliminary estimate released last month beat expectations, showing the world's second largest economy growing by a resilient 0.5% from the previous quarter or an annualized 2%.

"Given the continued rapid pace of corporate profit growth -- a key factor in deciding levels of the appetite for fixed asset investment -- corporate capital spending, even if it may see some moderation in the growth pace, will maintain its solid trend going forward," Mizuho Research Institute economist Yasuo Yamamoto said.

Copyright Agence France-Presse, 2006

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