Japan's economy managed to steer clear of a technical recession, despite the fourth-quarter upward revision being less robust than anticipated. This is raising potential concerns about the slow pace of economic recovery.
As per the Cabinet Office, Japan's revised gross domestic product (GDP) grew at an annualized rate of 0.4 per cent in the October-December period compared to the previous quarter. This figure surpasses the initial projection, which had anticipated a 0.4 per cent contraction, according to a report by Reuters.
Despite this, the figure missed economists' prediction of a 1.1 per cent increase in a Reuters survey. In terms of quarter-on-quarter growth, GDP expanded by 0.1 per cent, in contrast to the initial 0.1 per cent decline recorded, and the median forecast of a 0.3 per cent increase.
Anchoring the upward revision was a 2 per cent increase in capital expenditure quarter-on-quarter. While it outperformed the preliminary 0.1 per cent decrease, it still fell short of the median market forecast predicting a 2.5 per cent rise.
In the same quarter, private consumption, which accounts for around 60 per cent of Japan's economy, witnessed a 0.3 per cent decline, marginally lower than the initial estimate's 0.2 per cent decline. A Cabinet Office official stated that seafood and household appliances were factors contributing to the downward pressure in this category.
Last week, Japan, currently ranked as the world's fourth-largest economy, witnessed the 22nd month of consecutive shrinking inflation-adjusted real wages in January. Household spending, on the other hand, recorded its largest year-on-year decline in 35 months. The share of real GDP attributed to external demand remained steady at 0.2 percentage points, mirroring the initial reading.
