Japan's economy shrank faster than initially estimated in the April-June period to a five-year low due to weaker-than-expected corporate capital spending, the government said Monday.
Gross domestic product (GDP) contracted at an annualized 7.1 percent in the second quarter, a downgrade from the preliminary figure of minus 6.8 percent announced last month, according to the Cabinet Office.
That followed a 6.0 percent jump in the January-March quarter and marked the steepest contraction since the first quarter of 2009, when the GDP plunged 15.0 percent due to the economic downturn triggered by the 2008 global financial crisis.
On a quarterly basis, the gross domestic product (GDP) of the world's third-biggest economy declined 1.8 percent in the three months ended June 30 from the January-March period, compared with the preliminary estimate of a 1.7 percent fall.
Personal consumption, which accounts for about 60 percent of Japan's GDP, fell 5.1 percent, revised down from a 5.0 percent drop in the initial report, posting the sharpest plunge since comparable data became available in 1994, apparently affected by the April 1 sales tax hike to eight percent from five percent.
Corporate capital spending, another key pillar of domestic demand, declined 5.1 percent, substantially revised down from a 2.5 percent contraction in the previous estimate and posted the worst since the April-June quarter in 2009. Housing investment also plunged 10.4 percent, downgraded from a 10.3 percent fall.
The revised GDP data came as concern grows that the sales tax hike has caused negative a bigger impact to the country's economy than initially estimated. It could also affect Prime Minister Shinzo Abe's decision on whether to go ahead with a further 2 point rise in the sales tax to 10 percent in October 2015.
Abe has said he will make a final judgment by the end of this year after assessing various economic data through December, including the revised July-September GDP reading. "Japan's economy continues to be on a track to recovery. We will carefully watch the personal consumption trend," Chief Cabinet Secretary Yoshihide Suga told a press conference..
GDP is the total value of goods and services produced domestically.