Japan's economy failed to grow on a quarterly basis during the April-June period, with gross domestic product (GDP) growth coming in at zero and missing already subdued forecasts.
On an annualized basis, GDP expanded 0.2 percent, slowing dramatically from the 1.9 percent spike in the first three months of the year. A Reuters poll of economists had predicted an annualized increase of 0.7 percent and a quarterly rise of 0.2 percent.
Market reaction was muted. The benchmark Nikkei equity index was down 0.2 percent in early trade; the data were released just prior to market open. The dollar-yen pair initially spiked as high as 101.41, from around 101.19 just prior to the release. At 8:43 a.m. HK/SIN, the pair was at 101.31.
Private consumption, which makes up around 60 percent of GDP, edged up 0.2 percent on-quarter, slowing from the previous quarter's 0.6 percent growth. Meanwhile, domestic demand's contribution to GDP was 0.3 percentage point.
"Japan's economy is likely to achieve a recovery driven by private demand though the government must be mindful of risks such as slowing emerging market growth and uncertainty over the fate of Britain's exit from the European Union," Reuters quoted the country's economy minister Nobuteru Ishihara as saying.
Just last week, government estimates indicated the world's No.3 economy would miss its nominal GDP goal of 600 trillion yen ($5.7 trillion) in fiscal 2020, with Tokyo now expecting nominal GDP of 551 trillion yen instead, Reuters reported. The downgrade comes despite aggressive massive monetary and fiscal stimulus from Prime Minister Shinzo Abe's economic program, dubbed "Abenomics," which had aimed to kick start the long-moribund economy out of a decades-long deflationary slump.