Japan's economy grew at a 2.2% annual rate in Oct-Dec, as consumers held back on spending

TOKYO (AP) — Japan’s has cut its estimate for its economic growth in the last quarter of the year to a 2.2% annual pace from 2.8% as consumer spending hit demand.

The Cabinet Office said Tuesday that Japan’s real gross domestic product, which measures the sum value of a nation’s goods and services, also was lower due to higher private inventories than earlier reported.

It was the third straight quarter of expansion, and the government maintains that the economy is moderately recovering. On a quarter-to-quarter basis, seasonally adjusted real GDP grew 0.6%, revised from 0.7%. Private demand shrank 0.3%, worse than the 0.1% given earlier. Exports grew 1.0%, instead of the earlier 1.1%.

Unlike the U.S. and some other nations, Japan has been dogged by deflation, and these lower prices stifle growth. But recent wage growth has kept deflationary trends in check.

The slower growth than expected complicates policymaking for the Bank of Japan, which has been expected to raise interest rates. Annual negotiations between labor and management are resulting in bigger wage increases and the central bank has said it will raise its benchmark rate if the economy holds up and prices continue to rise at the projected steady rate of 2%.

The government kept unchanged its finding that the Japanese economy grew at a meager 0.1% annual rate, the fourth straight year of expansion.

The outlook for Japan is clouded by uncertainties about the future course for the U.S. economy and policies of U.S. President Donald Trump, especially tariffs. Japanese companies rely heavily on foreign trade, and tariffs on Japanese exports as well as those of China and other neighboring Asian nations, as well as Mexico and Canada, would reverberate across the globe.

Trade minister Yoji Muto was visiting Washington on Monday in an effort to avert higher tariffs on Japanese exports of steel and aluminum, among other products.

Muto was relaying concerns to U.S. officials that higher tariffs will hurt both Japanese and American businesses, investments and jobs, according to the ministry.

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Yuri Kageyama is on Threads: https://www.threads.net/@yurikageyama