Japan's economy grew just 0.4 percent in the April-June quarter, falling short of forecasts and off the blistering pace in the preceding quarters, although economists and the government said the recovery would continue.
The growth rate, hit by flat capital spending, compared with a consensus forecast of 1.0 percent and a revised 1.6 percent growth in January-March and 1.8 percent in October-December.
While the weak showing added to growing worries about recent soft economic indicators and falls in stock markets world-wide, economists said other data suggested that Japanese capital spending remained brisk and that this should show either in revised GDP figures for the quarter or in July-September figures.
"We don't think capital spending was actually this weak, and so we might see a big rise in the July-September figures," said Yoshimasa Maruyama, a senior economist at Mizuho Research Institute. "The recovery is still continuing."
Capital spending was unchanged from the previous quarter, compared with a forecast 2.0 percent gain.
But data earlier this week showed private-sector machinery orders, a key gauge of trends in capital spending, surged by a record 10.3 percent in April-June from the previous quarter.
On an annualised basis, the April-June growth rate translated into 1.7 percent, compared with a pace in excess of 6 percent in the preceding quarters.
Private sector consumption, which accounts for over half of all economic activity, rose 0.6 percent in April-June from the previous quarter.
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