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Japan revises GDP growth
March 09, 2018
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TOKYO: Japan’s economy expanded more than initially estimated in the last quarter of 2017, thanks to an upward revision of capital expenditure and inventory data, confirming the longest run of growth in 28 years.

Global demand for technological products has driven an investment boom in many of the country’s high-end sectors, such as autos, semiconductors and precision machinery, mirroring trends seen in other major Asian exporting nations.

However, despite the solid growth -- the eighth consecutive quarter of expansion -- analysts say the Bank of Japan is unlikely to bring forward a debate on exit from monetary stimulus given the sluggish wages that have prevented consumer spending and inflation from accelerating. BOJ Governor Haruhiko Kuroda, who is set to serve another term, rattled markets last Friday by flagging for the first time the prospect of an exit from monetary stimulus if 2 per cent inflation were met in fiscal 2019 - a remark he later tempered.

“It will take longer to achieve the 2 per cent target. There’s no change to this perception after the GDP data that merely confirmed Japan remains on track for stable growth led by global economy’s expansion,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.

“Inflation holds the key to a debate on exit, but it won’t accelerate as long as wages and private consumption lack momentum even as capital spending rises. In that sense, the focus will be the upcoming annual wage talks, rather than data.”

The economy grew an annualised 1.6 per cent in October-December, versus economists’ median estimate for 0.9 per cent annualised growth and the preliminary reading of a 0.5 per cent expansion, Cabinet Office data showed on Thursday.

The annualised growth rate translates into quarter-on-quarter expansion of 0.4 per cent in real, price-adjusted terms, against an initial reading of a 0.1 per cent growth and the median estimate for 0.2 per cent growth.

There was no significant market reaction during Asian trade to the stronger-than-expected data.

The upward revision was due to faster-than-expected gains in capital expenditure, thanks to investment in information and communications such as smartphone and production machinery including robots and labour-saving technology.

Private inventory was the biggest contributor to the upward GDP revision due to rising stock of crude oil and natural gas, steel products, electronics parts and devices, a Cabinet Office official said.

Policymakers are keen to stoke a virtuous growth cycle in which higher wages stimulate consumer spending, in turn boosting business investment and accelerating inflation.

Reuters

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