Pressure builds to pump more yen into Japanese economy after growth slows

Japanese growth slowed sharply at the end of last year, putting pressure on the central bank to pump billions more into recovery efforts.

Growth of 0.3 per cent between October and December was well below expectations. Economists expect it to pick up again in the present quarter as shoppers rush to beat an April VAT hike, but further disappointments could put the heat on the Prime Minister, Shinzo Abe, and the Bank of Japan (BoJ) to act again after the shock and awe tactics to jumpstart the country economy last year.

Japan's trade position has weakened dramatically despite a falling yen as the nation is now much more reliant on energy imports after the 2011 tsunami which shut down its nuclear capacity. Meanwhile, slower growth in China and other markets has taken a toll on exports, sapping growth at a critical time for Mr Abe's recovery strategy.

Rob Carnell, an economist at ING Bank, said: "The arguments for the BoJ to provide a further dollop of yen weakness through some pre-emptive expansion of QE (quantitative easing) looks to be gathering strength."