New figures show that Japan's economy grew at a much slower rate than previously thought in the third quarter, as the country's fragile recovery from recession was hit by a soaring yen.
The world's number two economy expanded at an annualised pace of just 1.3% in the July-September period, sharply down from the previous estimate of 4.8%, the Cabinet Office said.
It meant the country - which early this year emerged from its worst post-war recession - had growth of just 0.3% in the three months, compared with the initial estimate of 1.2%. The lower growth figures were worse than analysts had expected.
The main reason was that capital investment, the amount companies spend on new assets, was revised down to reveal a contraction of 2.8% from an original estimate of 1.6% growth. A key to the fall is the yen's strengthening against the dollar, which hit exporters' income.
Prime Minister Yukio Hatoyama admitted the difficulty of navigating Asia's biggest economy out of deep stagnation and stressed the benefits of a new government stimulus package he announced on Tuesday.
His government is to pump up to $274 billion into the economy, with $80 billion in direct spending, including on green programmes, assistance for small business, job security and aid for local communities.
Last week the Bank of Japan said it would pump more than $100 billion into financial markets through cheap short-term loans.
Improving overseas markets have helped gradually raise exports and production, which collapsed during the global downturn that from last year slashed demand for Japanese cars, electronics and other goods. But weak domestic demand, the strong yen and deflation still weigh heavily on Japan's recovery.
