By Satoshi Sugiyama
TOKYO (Reuters) – Japan’s economy expanded at an annualised clip of 0.4% in October-December from the previous quarter, better than the initial estimate for a 0.4% contraction, government data showed on Monday.
The revised figure for gross domestic product (GDP) released by the Cabinet Office compared with economists’ median forecast for a 1.1% uptick in a Reuters poll.
The fresh data meant Japan’s economy – now the world’s fourth-largest behind Germany – avoided a technical recession thanks to companies’ stronger-than-expected spending on plants and equipments.
On a quarter-on-quarter basis, GDP grew 0.1%, compared with the initial 0.1.% drop reading and a median forecast for a 0.3% rise.
Capital expenditure increased 2.0% quarter-on-quarter, better than the preliminary 0.1% decrease the government announced but below a median market forecast of a 2.5% rise.
The upward revision came amid growing market expectations that the Bank of Japan could ditch negative interest rates as early as this month, fuelled in part by board members’ recent hawkish comments that Japan was moving towards the central bank’s 2% inflation target.
The BOJ is scheduled to hold a two-day policy-setting meeting on March 18-19.
Meanwhile, private consumption, which makes up about 60% of Japan’s economy, fell 0.3% in October-December, slightly worse than the 0.2% drop in the initial estimate.
Japan last week saw inflation-adjusted real wages in January shrinking for the 22nd month in a row, while year-on-year household spending in the same month marked the biggest drop in 35 months.
External demand contributed 0.2 percentage points to real GDP, unchanged from the preliminary reading.
(Reporting by Satoshi Sugiyama; Editing by Chang-Ran Kim)
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