Japan Economy Recovers In Q4

Japan’s economy posted growth in the fourth quarter underpinned by business investment, while a recession was initially estimated, revised data from the Cabinet Office showed Monday.

Gross domestic product posted an annual growth 0.4 percent in the fourth quarter compared to the previous estimate of 0.4 percent decline.

This followed a 3.2 percent contraction in the third quarter.

The Japanese economy grew 0.1 percent sequentially after shrinking 0.8 percent in the third quarter.

The fourth quarter growth also came in contrast to the initial estimate of 0.1 percent decrease.

Private consumption fell 0.3 percent and government spending decreased 0.2 percent.

At the same time, business investment grew 2.0 percent reflecting an upward revision from a 0.1 percent fall.

Exports of goods and services increased 2.6 percent and imports gained 1.7 percent from a quarter ago.

Capital Economics’ economist Marcel Thieliant said the Bank of Japan tends to take into account its own consumption activity index and does not seem to be particularly concerned about the recent sluggishness in activity.

“With this year’s annual spring wage negotiations set to deliver larger pay hikes than most had anticipated, the chances that the Bank will end negative interest rates at its meeting next week are rising,” the economist added.

The BoJ is set to announce its next monetary policy decision on March 19.

Last week, news agency Kyodo reported that Japan’s government has began discussions over officially declaring an end to deflation. The government will carefully examine the outcome of wage negotiations this spring and the inflation outlook.