The Japanese economy has shown signs of growth in the fourth quarter, with major support coming from business investment according to revised data from the Cabinet Office released on Monday. Contrary to initial estimates, the gross domestic product (GDP) increased by 0.4 percent annually in the last quarter, as opposed to a projected decrease of the same figure. This comes on the heels of a 3.2 percent contraction in the third quarter.
On a quarterly basis, the Japanese economy showed a modest increase of 0.1 percent after a decrease of 0.8 percent in the previous quarter, defying previous predictions of a mild 0.1 percent decrease.
However, the data points to a decrease in private consumption by 0.3 percent and government spending by 0.2 percent. On a positive note, business investment reflected a significant growth of 2 percent, an improvement from an initially projected fall of 0.1 percent. The quarter also saw an increase in the exports of goods and services by 2.6 percent and imports by 1.7 percent compared to the previous quarter.
Economist Marcel Thieliant from Capital Economics noted that the Bank of Japan (BoJ) usually considers its own consumption activity index and does not seem overly worried about the recent slowdown in activity. Thieliant added, "larger than anticipated pay hikes are expected from this year's annual spring wage negotiations, increasing the likelihood of the BoJ ending negative interest rates at its meeting next week."
The BoJ's next monetary policy decision is due on March 19. Meanwhile, the Kyodo news agency reported last week that the Japanese government has initiated discussions to officially declare an end to deflation. As part of this, the government plans to carefully review the outcomes of this spring's wage negotiations and the future outlook of inflation.
