Japan's economy expanded slower than was initially reported for the October to December 2020 period as companies reduced their capital spending due to the pandemic, the country's Cabinet Office said in new data published on Tuesday.
The report said that the slower growth for the period was mainly due to a sharper contraction in private inventories and capital spending, which refers to investing in new plants and equipment. The figures, for the fourth quarter of the calendar year, were less than what was previously reported for the period, even if exports had remained strong.
Over the last three months of 2020, Japan's economy grew a revised annualized pace of 11.7%, weaker than the preliminary reading of 12.7%. Despite the slower pace, the period still marked the second straight quarter of growth.
Analysts said that expected growth for the first quarter could end up slower, but the country's economy is expected to pick up its pace by the second quarter and throughout the rest of the year.
"Although vaccination started in Japan, it will take time to yield its impact, so the economy is forecast to go through some ups and downs," economists at Dai-ichi Life Research Institute said.
Factory output and export figures for the month of January slightly increased, signaling a stronger-than-expected recovery as demand rebounded globally.
Household spending for January was lower compared to the previous month, indicating that consumers were still cautious about how they spend their money. Household spending fell by 6.1% compared to the previous month, worse than the average analysts' expectation of a 2.1% drop for the period.
Private consumption for the three months matched the preliminary reading of a 2.2% growth. Net exports added 1.1 percentage points to the revised reading with domestic demand boosting it by 1.8 percentage points.
The Bank of Japan, the country's central bank, said that it plans to conduct a review of its policy tools next week. The bank said that it aims to make policies more "effective and sustainable" to deal with pandemic forces.
