Japan's economy grew just 0.4% in the April-June quarter, falling short of forecasts and well off the blistering pace of previous 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% and a revised 1.6% growth in January-March and 1.8% in October-December.
While the weak showing added to growing worries about recent soft economic indicators and falls in stock markets worldwide, 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.
Capital spending was unchanged from the previous quarter, compared with a forecast 2% 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% in April-June from the previous quarter.
On an annualised basis, the April-June growth rate translated into 1.7%, compared with a pace in excess of 6% in the preceding quarters. Private sector consumption, which accounts for over half of all economic activity, rose 0.6% in April-June from the previous quarter.
