Japan Economy Growth: Ideas Later.

Japan economy grows 1.3% in Oct.-Dec., revised up, on stronger investment

Article source: https://mainichi.jp/english/articles/20260310/p2g/00m/0bu/012000c

Article to be deleted after ideas.

Article:

TOKYO (Kyodo) -- Japan's economy expanded an annualized real 1.3 percent in the October-December quarter, revised up from an initially reported 0.2 percent increase, on stronger business spending as Prime Minister Sanae Takaichi pushes investment in priority areas, government data showed Tuesday.

Helped also by an uptick in private consumption, accounting for over half of gross domestic product, the GDP data marked the first rise in two quarters. Yet, crude oil price rises due to a Middle East conflict overshadow the economic outlook for resource-poor Japan, economists say.

Real GDP, adjusted for inflation, grew 0.3 percent from the previous quarter, compared with the initially reported 0.1 percent increase, the Cabinet Office said. GDP is the total value of goods and services produced in a country.

Capital spending increased 1.3 percent in the three months through December, revised up from a 0.2 percent increase, after data showed solid corporate investment in building data centers and producing semiconductor-making devices amid the spread of artificial intelligence.

With labor costs rising, companies have also been pushing digitalization and other labor-saving measures, resulting in purchases of software, the economists say.

Public investment was upgraded to a 0.5 percent dip from a 1.3 percent decline.

Private consumption grew 0.3 percent in the October-December period, in an upward revision from a 0.1 percent climb, reflecting increased demand for new smartphone models, but car purchases declined and persistent inflation dampened spending for food.

The revision was also due to a reduction in the margin of decline for spending on toys, games, fisheries and outlays for dining, a Cabinet Office official said.

Housing investment was slightly revised upward to a 4.9 percent rise from the 4.8 percent increase reported earlier.

Exports and imports both slid 0.3 percent, unchanged from the preliminary reading.

U.S.-bound shipments of cars remained affected by the imposition of higher tariffs by U.S. President Donald Trump that took effect in September. Spending by foreign visitors to Japan, which contributes to export figures, also fell.

Due to the moderate recovery in personal consumption and expected growth in real wages on slower inflation, the Japanese economy is estimated to grow in the January-March quarter, said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute.

He warned, however, that the recent increase in crude oil prices, stemming from U.S.-Israeli attacks on Iran since the end of February, raises uncertainties from the April-June quarter onwards for Japan, which relies almost entirely on foreign energy to power its economy.

Shinke said, "If rising energy prices continue, they will raise inflation," which will hurt the economy by reducing household spending. He added that companies are expected to pass on the increase in costs to consumers by raising the prices of their products and services.

Nominal GDP expanded an annualized rate of 3.5 percent, revising up from a 2.3 percent gain reported earlier.