Feb 13, 2:07 AM EST

Japan says its economy expanded at a steadily slowing pace in 2016, though a modest recovery in exports helped offset sluggish spending by households and businesses


AP Photo
AP Photo/Shizuo Kambayashi

Multimedia
Archery on horseback still draws crowd
Ainu Rebels reclaim cultural pride
Japanese defend whaling tradition
Japan deals with 'Minimata Disease'
Latest News
Some workers in Japan have enjoyed an early start to their weekend under a new initiative to encourage a better work-life balance

The Japanese first lady has resigned as "honorary principal" of a private elementary school run by a man with ultra-nationalistic views following an escalating controversy over the low price the school paid for government land

Japan's Crown Prince Naruhito has marked his 57th birthday with a pledge to follow in his father's footsteps as a symbol of the nation if his father's abdication wish is realized

Japan is turning to those hooded samurai-era acrobatic spies known as ninja to woo tourism

Embattled Japanese electronics maker Toshiba Corp. is selling its stake in a medical equipment leasing company to Canon Inc. for 31.4 billion yen ($277 million)

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Puerto Rico's governor has met with the U.S. treasury and health secretaries to seek support in pulling the island out of a deep economic crisis

Egyptians are cutting spending and trying to make it through the country's worst inflation in a decade under President Abdel-Fattah el-Sissi's economic reforms

New statistics show that China and France have overtaken the U.S. as Germany's largest trading partner

The CEO of Spirit Airlines, which features low fares but lots of fees, dismisses so-called basic economy fares

A once-prosperous section of Tulsa that became the site of one of the worst race riots in American history is attempting to remake itself again after decades of neglect

Britain's economy grew less quickly than originally estimated in 2016, losing the mantle of being the fastest growing among the Group of Seven of the world's biggest economies

A closely watched survey of German business optimism rose by more than expected in February in another sign that Europe's economy is gaining pace

United Airlines and American Airlines are selling new, cheaper 'basic economy' fares on flights to and from a few big airports

American Airlines is selling its new, cheaper 'basic economy' fare on flights to and from a few big airports

The number of people in Ireland with a full-time job has topped 2 million for the first time since the country suffered a calamitous crash in 2008

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

TOKYO (AP) -- Japan's economy expanded at a steadily slowing pace in 2016, though a modest recovery in exports helped offset sluggish spending by households and businesses, according to data reported Monday.

The 1.0 percent annual pace of expansion for the year compared with 1.2 percent growth in 2015. For all but one quarter of the year, private demand was flat or negative. And quarterly growth slowed to 0.2 percent in October-December, down from 0.6 percent in January-March.

The preliminary data released by the Cabinet office could be revised upward. But overall the report showed the challenges Japan's planners are facing in trying to rekindle growth without much help from corporate investment or wage increases.

THE GOOD NEWS: 2016 was the first year that Japan saw no quarter-to-quarter contractions in over a decade. Corporate investment rose 3.8 percent from a year earlier in the last quarter, and the net gain from trade rose 5.4 percent. A recent weakening of the Japanese yen against the U.S. dollar, from about 100 yen in the summer to about 114 yen per dollar now, is helping corporate profits and exports.

NOT SO GOOD: Real wages were flat in October-December, a main period for customary twice-annual bonuses. Household spending slipped 0.1 percent. For the year, private demand rose 0.4 percent, down sharply from 2015. Manufacturers generally have been slow to invest or raise wages, and the consumer demand that drives most business activity has remained tepid. Meanwhile, a weak yen tends to push prices for imported food and other items higher, further discouraging spending.

THE OUTLOOK: A mild recovery in China has helped boost demand for shipments of machinery and other industrial inputs from Japan. The usual boost from increased government spending at the beginning of the April-March fiscal year will also likely sustain growth in coming months. But with President Donald Trump threatening to raise tariffs to rebalance the U.S. trade deficit, "the increased dependence on exports to keep real GDP growth in positive territory is a concern given the growing risk of global trade tensions," BMI Research said in a report Monday. It forecast that growth would slow to 0.8 percent in 2017.

IN THE LONG RUN: Japan's population is shrinking and rapidly aging, so businesses are opting to expand in faster growing overseas markets rather than at home. Meanwhile, real disposable incomes have stagnated for the past three decades, while near-zero interest rates mean Japanese pensioners lose money on the nest eggs they rely on to survive retirement. Progress on promised sweeping reforms of labor laws and other regulations to make the economy more competitive has been slow. "The government needs to accelerate reforms, including changes to pension and tax systems, as well as labor rules to reduce obstacles to sustainable growth," Harumi Taguchi of IHS Global Insight said in a commentary.

© 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.