Japan’s economic expansion misses forecasts

Japan’s economy posted nearly flat growth in the second quarter despite an aggressive spending policy by the government.

Gross domestic product expanded by an annualised 0.2% in the three months to June, well below market forecasts for 0.7%, and a marked slowdown from the 2% increase in the first quarter.

The figures come after the government launched a massive new stimulus package worth 28 trillion yen ($265bn; £200bn). Japanese stocks fell after the data, reports BBC.

The Nikkei 225 opened 0.3% in the red over concerns Asia’s second-largest economy will continue to struggle.

On top of Prime Minister Shinzo Abe’s fiscal stimulus, Japan’s central bank is running negative interest rates and an unprecedented asset-purchase programme.

Timothy Graf, head of macro strategy at State Street Global Markets said Japan’s growth figures ‘could have been a lot worse’.

There are ‘worries building over slowing domestic consumption, capital expenditure and the potential for weaker net exports thanks to a stronger yen,’ he said.

‘It still keeps markets focused on whether the Bank of Japan will ease policy later this year, but there may be some sense of relief that the current growth slowdown is not more aggressive.’

However, shares of electronics-maker Sharp surged by as much as 17% after it said Taiwan’s Foxconn had completed its nearly $4bn takeover.

Australia’s benchmark S&P/ASX 200 is 0.3% lower while New Zealand stocks are trading flat.
Markets in South Korea and India are closed for a holiday.