Japan's economy grew at a slower pace than initially estimated in the second quarter as the US-China trade war prompted a downward revision of business spending.
The latest slowdown intensified calls for the central bank to deepen stimulus this month.
Weakness in the global economy and worsening trade protectionism have emerged as risks to growth and added some pressure for the Bank of Japan to expand stimulus when it meets next week.
The economy grew an annualised 1.3% rate in the three months from April to June, revised Cabinet Office data showed today.
This was weaker than the preliminary reading for 1.8% annualised growth and in line with economists' median forecast.
The annualised growth rate translates into a quarter-on-quarter expansion of 0.3% from January-March, compared with a preliminary reading for a 0.4% gain.
Capital spending in Japan rose just 0.2% from the previous quarter, much lower than a preliminary 1.5% rise and the median forecast for a 0.7% increase.
The capex downgrade was due to government statisticians including a demand-side survey of capex in the revised GDP data, which was not in the preliminary figures and showed weakness in the sector.
Analysts said that manufacturers cut spending in the quarter amid a re-escalation in US-China trade frictions.
Meanwhile, a private sector business survey published last week showed Japanese manufacturing activity declining for a fourth month in a row in August while export orders remained in contraction for a ninth month in a row.
Private consumption, which accounts for some 60% of gross domestic product, advanced 0.6% from the previous three months, matching the preliminary reading.
Net exports - or exports minus imports - subtracted 0.3 percentage point from revised GDP growth, signalling the economy is feeling the pain from the global growth slowdown.
The outlook for the world's third-largest economy remains clouded as risks from declining manufacturing overseas and at home hit exports.
Analysts have also warned of a possible drop in domestic consumption after Japan raises its sales tax to 10% next month, which could hit one of the economy's few growth drivers.
A separate Cabinet Office survey released today pointed to a bleak outlook for Japanese consumption.
The survey called the "economy watchers" sentiment index - which measures business confidence among workers such as taxi drivers, hotel workers and restaurant staff - was marginally higher than a more than three-year low hit in July.
The outlook index, indicating the level of confidence in future conditions, slipped to the lowest level since March 2014, the month before Japan's last sales tax hike in April 2014.
Amid the risks to growth, Bank of Japan Governor Haruhiko Kuroda has kept the door ajar for cutting interest rates further into negative territory, saying last week such move is among the bank's policy options.
Speculation is growing that the bank could ease policy as early as this month to prevent the yen from spiking, an increasingly likely prospect if the US Federal Reserve and the European Central Bank unveil new easing measures.
Growth is expected to hold up in the current quarter partly due to consumer front-loading their purchases ahead of next month's tax rise.
The consumer sector has been one of the few bright spots for the economy, which has expanded for three quarters in a row, although the pace of growth has slowed.
Household spending rose for an eighth consecutive month in July, marking the longest run of expansion since comparable data became available in 2000.
But that may not be enough to shield Japan's service sector from a slump in exports, sagging business sentiment and a contraction in manufacturing.
Japan's exports slipped for an eighth month in July, dragged down by China-bound shipments of car parts and semiconductor production equipment, while manufacturers' confidence turned negative for the first time since April 2013.