Japanese businesses appear to have downsized their level of investment. A report out this morning from the Japanese Ministry of Finance found that capital expenditures by private businesses declined 7.8% in the second quarter.
The report is presented in an annualized format, but covers an entire quarter. There was an expectation of 1.1% growth in this figure, making the actual results all the more detrimental. This decline poses an ominous challenge to the Japanese economy as business capital expenditures represent a sizeable portion of domestic investment. The reverberations may put a significant dent in Japan's GDP growth over a longer period.
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