TOKYO: Japan’s economy probably expanded in the final three months of 2024 marking a third quarter of consecutive growth, a Reuters poll showed, as strong business investment outweighed anaemic consumption.
The Bank of Japan raised short-term interest rates last month to their highest in 17 years, and growth momentum in the world’s fourth-largest economy will be among the key factors determining its rate hike schedule this year.
Japan’s real gross domestic product (GDP) is forecast to have risen an annualised 1.0 per cent in October-December, according to a median forecast of 17 economists, slightly less than the revised 1.2 per cent expansion in July-September.
On a quarter-on-quarter basis before annualisation, the fourth-quarter growth rate was projected at 0.3 per cent, on par with the previous quarter.
Private consumption, which accounts for more than half Japan’s economic output, probably shrank by 0.3 per cent after being revised down to 0.7 per cent in the third quarter. Analysts pointed out the creeping impact of a three-year decline in real wages that was weighing on households’ purchasing power.
Meanwhile, after a negative reading in July-September, capital expenditure is seen up 1.0 per cent. Companies’ capital investment remains strong amid labour shortages, recent data has shown.
“The headline figure was puffed up by the positive external demand contribution due to shrinking imports, while consumption and exports contracted; what’s inside isn’t quite good,” Saisuke Sakai, chief economist at Mizuho Research & Technologies, wrote in a report.
“In January-March, capital expenditure should keep growing, but consumption may remain sluggish given weak real wages, and slowing US and Chinese economies will keep curbing exports.”
The GDP data will be announced on Feb 17 at 8.50am.
Separate data from the BOJ is expected to show Japan’s wholesale inflation increased 0.3 per cent month-on-month in January, the same as the previous month’s rate, according to the poll.
The indicator, which measures prices of goods firms charge each other, will be released on Feb 13 at 8.50am and will probably show a rise of 4.0 per cent from a year ago, faster than December’s 3.8 per cent growth.
