Economic growth in Japan virtually ground to a halt in the July-September quarter as a slowdown in global demand choked its export-reliant recovery.
Gross domestic product (GDP) grew a meagre 0.1% from the previous quarter in real, price-adusted terms, according to government data today.
It was the sixth straight quarter of expansion but much weaker than the 0.5% growth forecast by economists, with external demand a drag on the economy for the first time in eight quarters.
The figure translated into an annualised rate of 0.3%, well below US growth of 3.7% in the same period and a far cry from Japan's blistering, decade-high pace of over 5% in the final quarter of last year and the first quarter of 2004.
The negative turn in external demand, or net exports, clipped 0.2 percentage point off growth. One reason was higher oil prices, but economists warned that exports could soon peak, with the yen's rekindled strength adding to the worry.
The soft GDP figure was not good news for government ministers, who need to bring down Japan's public debt by raising taxes when economic conditions allow.
Finance Minister Sadakazu Tanigaki said the GDP data was in line with the government's view that the economy was recovering and he did not think it would affect a debate on abolishing personal income tax breaks next year.
Economics Minister Heizo Takenaka was more cautious but said that fiscal and monetary policies could not be based on growth figures alone.
