Japan today said its economy grew at a slower pace in the third quarter than initially estimated, with the fragile post-quake recovery weighed by a strong yen and the euro zone debt crisis.
The Cabinet Office said the economy expanded by an annualised 5.6% in the July-September quarter - lower than the 6% announced last month - with a government spokesman saying growth was "moderating."
However, the figure represents Japan's first economic expansion in three quarters, as the country recovers from the March 11 quake and tsunami disaster with manufacturers ramping up production. The monthly outcome still beat analysts' expectations for a revised 5.2% gain.
On an quarter-on-quarter basis, gross domestic product growth was 1.4 % in the three months from July to September, revised down from 1.5%, the figures showed.
Authorities have been cautious about the prospects for Japan's economy, saying weakness in key US and European export markets could dash hopes for a sustained recovery.
The downward revision was expected after the government said last week it was lowering its capital spending estimate, a key figure in calculating gross domestic product.
Official data yesterday showed Japan's core private-sector machinery orders, a leading indicator of corporate capital spending, fell 6.9% in October from the previous month.
Economists were also concerned that private consumption, which accounts for about two-thirds of Japan's GDP, was revised down to a 0.7% on-quarter rise, from an initial estimate for a 1% increase.
Last month, Bank of Japan governor Masaaki Shirakawa warned the country would continue to face a "severe situation" and that Europe's sovereign debt crisis was the biggest risk factor in any recovery.
The crisis has also been a key issue behind Japan's surging yen, which investors have flocked to as they seek a safe-haven currency. The yen's rise to post-World War II highs against the dollar has prompted the central bank to intervene in foreign exchange markets to bring down the unit's surging value, which erodes exporters' profits and makes Japanese goods less competitive.
Japan fell into a trade deficit in October, reversing a year-earlier surplus, as the euro zone crisis and strong yen weighed on exporters, while record flooding in Thailand pounded the operations of Japanese car makers and electronics firms with plants in the country.
The flooding came as Japanese firms were near to restoring output to normal levels at home after the quake-tsunami shattered component supply chains.