BY SATOSHI SUGIYAMA
TOKYO- Japan’s economy expanded in the October-December quarter at a slower pace than initially reported, weighed by weaker consumption but still likely supporting the case for further interest rate hikes.
At the same time, government officials and analysts expressed concern about risks from US President Donald Trump’s tariff policies and soft consumption affected by higher prices.
Gross domestic product (GDP) expanded an annualized 2.2 percent in the three months to December, the Cabinet Office’s revised data showed on Tuesday, slower than the 2.8 percent growth in the initial estimate and economists’ median forecast.
The revised GDP numbers translate into a quarter-on-quarter expansion of 0.6 percent in price-adjusted terms, compared with 0.7 percent growth issued in February. The softness in consumption was also seen in much weaker-than-expected household spending data released on Tuesday.
“There wasn’t any significant change, so I don’t think it will have any impact on changing people’s perceptions of the economy,” said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute.
“If you look at GDP on its own, I don’t think it will prevent the Bank of Japan (BOJ) from raising interest rates.”
The BOJ raised short-term interest rates in January to their highest in 17 years and growth momentum in the world’s fourth-largest economy will be among key factors determining how fast it continues to tighten policy.
The capital expenditure component of GDP, a barometer of private demand-led strength, rose 0.6 percent in the fourth quarter, revised up from a 0.5 percent expansion in the initial estimate. Economists had estimated a 0.3 percent rise.
Private consumption, which accounts for more than half of economic activity, was unchanged versus the preliminary reading of 0.1 percent uptick.
External demand, or exports minus imports, contributed 0.7 of a percentage point to growth, unchanged from the preliminary reading. Domestic demand shaved 0.2 of a percentage point off.
