Why Japan’s GDP was revised up
tokyo — The Japanese economy grew faster than initially estimated in the fourth quarter as capital investment staged a quick recovery from a series of natural disasters in the previous quarter.
However, despite the upward revision to growth, economists are likely to temper their optimism on the outlook given disappointing data on exports and factory output and with the economy expected to weaken due to the Sino-US trade war.
Japan’s GDP rose an annualised 1.9 per cent in October-December, more than the initial estimate of a 1.4 per cent expansion and the median estimate for a 1.8 per cent increase, data from the Cabinet Office showed.
That followed a revised 2.4 per cent annualised contraction in the third quarter, which was the biggest decline in more than four years. Economists warn that capital expenditure and overall economic growth are likely to weaken in the first half of this year as exports dwindle and inventories pile up due to a slowdown in global trade.
“Capital expenditure did very well, but we see an increase in inventories in the fourth quarter that points to weak sales,” said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. “Falling exports will hit growth in the first quarter. The first half of this year will be weak, but I don’t expect a recession.”
The revised figure translates into quarter-on-quarter growth of 0.5 per cent in price-adjusted terms. This is more than a preliminary reading of 0.3 per cent and economists’ median estimate of a 0.4 per cent.
The capital expenditure component of GDP rose 2.7 per cent from the previous quarter, marking the fastest expansion since JanuaryMarch 2015. That was slower than the median forecast for 2.8 percent but faster than the preliminary 2.4 per cent expansion.
The value of inventories rose by ¥157 billion ($1.41 billion) in the fourth quarter, the second consecutive quarter of gains as inventories of raw materials and partially finished goods piled up. Private consumption, which accounts for roughly 60 per cent of GDP, rose 0.4 per cent in the fourth quarter, less than the preliminary 0.6 per cent increase. —