According to the latest figures released, the total capital spending by Japanese firms fell 5.2 per cent during the first quarter of the year compared to the same quarter of the previous year.

The fall in capital spending indicates that the government of Prime Minister Shinzo Abe is still facing challenges in reviving the world's third largest economy. The fall excludes software compared to 7.2 per cent fall recorded in the earlier quarter, according to data released by the Ministry of Finance in Tokyo today. The data also showed that the total investments fell by 0.9 per cent compared to the previous quarter.

Abe is working to ensure that the investor sentiment remains intact in the face of weak global economic environment and volatility in the Japanese stock markets. He is aiming to restore annual private investment to the 70 trillion yen in the Japanese economy through bold steps from the government to support recovery in the country.

IMF is expecting the Japanese economy to grow at 1.6 per cent this year. It also said that controlling the country's national debt, which is now the highest among the developed nations and planned doubling of the nation's sales tax to 10 per cent by 2015 are crucial for the country's financial recovery.

It is believed that the policies of Prime Minister Shinzo Abe are most likely to boost business confidence and encourage capital spending in the country. Mr. Abe has been suggesting more aggressive monetary easing, higher stimulus spending and faster economic reforms.