Japan’s Economy Grew Much Faster Than First Estimated in Q3
Japan’s Economy Grew Much Faster Than First Estimated in Q
(Bloomberg) -- Japan’s economy expanded in the third quarter at a much faster pace than initially reported, as capital investment and private consumption proved much stronger than first estimated.
Gross domestic product grew at an annualized pace of 1.8% in the three months through September from the previous quarter, faster than an initial reading of 0.2%, revised Cabinet Office data showed Monday. The result was stronger than projected by any of the economists surveyed by Bloomberg. The median forecast was for a 0.6% expansion.
Key Insights
Revised third-quarter growth came in faster than the initial government estimate after data earlier this month showed stronger capital spending by manufacturers. Continued robustness in business investment is a positive sign that concern over the global slowdown has yet to buckle corporate sentiment. “Capital spending was the key driver for the upward revision,” said Norio Miyagawa, senior economist at Mizuho Securities Co. A shortage of workers is forcing companies to invest in labor-saving equipment, while the Oct. 1 sales tax hike may also have pushed some companies to bring investment forward, he said. The figures come after the government last week announced 13.2 trillion yen in fiscal measures to support growth and the recovery from typhoon damage. While domestic demand has kept the economy expanding this year despite falling exports, gross domestic product is expected to contract 2.6% in the last three months of this year as consumers stay home following October’s sales tax hike. Looking ahead, the government said its fiscal package will boost growth by 1.4 percentage point over time. Economists have cast doubt on that figure and the speed at which spending will reach the economy, but they largely agree that the package makes it easier for the Bank of Japan to hold off on extra stimulus. While the U.S.-China trade war continues to cast a large shadow over the global economic outlook, Tokyo’s own trade spat with Seoul has cut spending by South Korean tourists in Japan, weighing on overall growth.
What Bloomberg’s Economists Say
“Looking ahead, we expect a sharp contraction in 4Q GDP, with stronger fiscal spending failing to offset weakness in other major components. The higher sales tax and global slowdown will leave a heavy mark. Further out, fresh stimulus should help shore up the economy.”
--Asia Economist Team
Click here the view the piece.
Get More
On a non-annualized basis, the economy expanded 0.4% from the second quarter. Economists predicted a 0.2% expansion. Business investment rose 1.8%, compared with a forecast for a 1.4% gain. Private consumption increased 0.5%. The forecast was for a 0.4% gain. Separate data showed the current account balance for October was a surplus of 1.82 trillion yen, compared with the 1.81 trillion yen surplus estimated by economists.
