Japan’s reconstruction-fueled rebound waned in the second quarter as consumer spending growth almost stalled and export gains diminished, increasing the chance for monetary and fiscal stimulus.
Gross domestic product advanced an annualized 1.4 percent in the three months through June, less than the median estimate of 2.3 percent in a Bloomberg News survey of economists and down from 5.5 percent the previous quarter, a Cabinet Office report showed in Tokyo today. Unadjusted for prices, GDP contracted at a 0.6 percent annual pace.
Government incentives for households to purchase fuel- efficient cars have been supporting consumer spending, which accounts for more than half of the economy. Mizuho Securities Co. expects the program to expire this month, which may increase the nation’s reliance on overseas demand for growth. Prime Minister Yoshihiko Noda has also budgeted 19 trillion yen ($243 billion) for rebuilding from last year’s earthquake and tsunami.
The yen’s advance against the dollar is also eroding the value of overseas earnings, with exporters such as Sony Corp. and Canon Inc. cutting profit forecasts in the past month.