Japan's Economy Grew At A Mild Pace During Second Quarter

The Japanese economy issued its report today, showing that economy expanded at the slowest pace in three quarters as global demand retreated, which led to weak the nation's export, signaling that the recovery in the world's second largest economy is losing steam.

Japan's annualized gross domestic product preliminary reading grew 0.4% in the second quarter, after growing 4.4% during the previous quarter, while the actual reading less than analysts' estimates of 2.3%. Also the GDP expanded 0.1% in the second three months ended June 30, compared with a previous reading 1.2% which was revised to 1.1%, while the forecasts referred to 0.6%.

Also Japan annualized GDP deflator preliminary reading inclined to -1.8% during the second quarter, compared with a previous -2.8% a year earlier, while the current reading came inline with anticipations which noted that.

Furthermore, moderating growth in the world's second largest economy, pressuring BOJ to ease monetary policy to spur the expansion and stamp out deflation as the nation's public debt.

The Japanese companies' overseas exports will be very difficult to cope with over the long term, and their earnings are under threat as a higher yen crisis has a negative effect on the nation's exports, which is the main pillar of growth in the nation.

Analysts indicate that the Yen's advance that would be disastrous incoming period as the economy would not able to earn enough from exports to pay for commodities from overseas.

The Bank of Japan decided to keep interest rate near zero at 0.10% during the month of August in to support the economy's recovery as the bank gauges the risk the Yen's gain.

However, the Bank increased its credit program to 20 trillion yen ($232 billion) during March, and in June unveiled a 3 trillion yen, which encouraged short-term loans. The BOJ is unlikely to ease policy any time soon, it will 'naturally consider what it can do' if the global economy stagnates and the yen’s gains accelerate.

Japanese government is working to support the economy recovery as offering shoppers incentives to buy energy-efficient cars and electronics, helping to increase consumer spending, which accounts for more than 50% of the economy.

Moreover, The Japanese companies' performance improved during last period, which supported the companies to cope the Yen's high.

From other side, Japan's current account surplus unexpectedly shrank for the second straight months during June as weakening exports,

The central bank's assessment for the economy remain unchanged as it said in the statement accompanied the rate decision 'the nation will continue to expand', adding that there is no sufficient momentum to guarantee a sustaining recovery in domestic and private demand