TOKYO—Japan’s economy is still growing but its momentum is starting to slow.
The country’s Cabinet Office said Thursday that Japan’s third-quarter gross domestic product grew 0.5 percent, or 1.9 percent on an annualized basis. The country posted seasonally-adjusted growth of 0.9 percent in the second quarter and 1.1 percent in the first quarter. Still, the July to September figures beat market expectations.
Private consumption growth slowed to 0.1 percent from 0.6 percent growth the previous quarter.
Exports dipped into negative territory, shedding 0.6 percent in the third quarter. They grew 2.9 percent in the second quarter and 3.9 percent in the first quarter.
While consumer spending and exports lost momentum during the third quarter, Japan’s economy remains in good shape and growth is likely to pick up in the coming months ahead of next April’s sales tax increase, said Tomo Kinoshita, chief economist at Nomura bank.
“We look for growth to pick up again heading toward [the first quarter of 2014], which is immediately before the consumption tax hike. We expect the driver here to be rush demand ahead of the hike,” he wrote in a note distributed Thursday. “On the whole, we look for the Japanese economy to continue moving steadily toward an end to deflation.”
Japan’s Prime Minister Shinzo Abe, who has spearheaded the country’s economic rebound, has pushed through controversial legislation to raise the country’s sales tax to 8 percent from 5 percent next April and to 10 percent in 2015.