Japan’s economy managed to sidestep a technical recession, according to revised government data released on Monday. The update revealed a minor expansion in the fourth quarter, though the slight improvement underscores ongoing concerns about the nation’s sluggish economic recovery.
The Cabinet Office’s revised figures showed Japan’s gross domestic product (GDP) growing at an annualized rate of 0.4% in the October-December period, a positive shift from the initially estimated 0.4% contraction. Quarter-on-quarter, the GDP saw a growth of 0.1%, an adjustment from a previously reported 0.1% drop, though it fell short of the expected 0.3% rise.
This modest economic uptick comes amid speculation that the Bank of Japan might abandon its negative interest rate policy soon, spurred by recent comments from board members suggesting Japan is inching closer to the central bank’s 2% inflation target.
The improvement in the fourth quarter GDP was primarily driven by a 2.0% increase in capital expenditure, a significant rebound from the preliminary estimate of a 0.1% decline, yet still below the anticipated 2.5% rise.
Private consumption, which accounts for roughly 60% of Japan’s economy, declined by 0.3% in the final quarter of last year, slightly worse than the initial estimate of a 0.2% decrease. Decreased spending on seafood and household appliances were among the factors contributing to this dip.
External demand added 0.2 percentage points to real GDP, consistent with the initial reading. Meanwhile, Japan’s main stock market index, the Nikkei 225, experienced a 2.5% drop on Monday morning following the announcement.
This latest data presents a mixed picture of Japan’s economic landscape, highlighting the challenges it faces in sustaining recovery momentum amidst subdued domestic demand.
