Japan's Economic Growth Faces Headwinds Despite Rise in Consumption

Japan's economy grew by an annualized 0.9% in Q3, hindered by weak capital spending and potential external risks. Though consumption rose by 0.9%, capital spending dropped by 0.2%, impacting growth. The Bank of Japan maintained low interest rates, observing easing risks from the U.S. economy.

Japan's economy expanded at an annualized rate of 0.9% over the July-September quarter, according to government data released on Friday. The growth was slower than the previous quarter, primarily due to weak capital spending.

Despite surpassing the median market estimate of a 0.7% gain, the gross domestic product data indicates a fragile economic recovery. Domestic demand remains subdued, and concerns are mounting over potential slowdowns in the U.S. and Chinese economies, which could affect Japan's exports.

Private consumption, which accounts for over half of the economic output, rose by 0.9%, exceeding the expected 0.2% increase. However, capital spending declined by 0.2%, mirroring economist expectations. The Bank of Japan maintained ultra-low interest rates, noting improving conditions in the U.S. economy.

(With inputs from agencies.)