TOKYO- Japan’s economy expanded at a much faster pace than initially reported in the third quarter, as resilient domestic demand and business spending offset the hit to growth from falling exports and global trade tensions.
Gross domestic product grew an annualized 1.8 percent in July-September, stronger than the preliminary reading of 0.2 percent annualized growth, Cabinet Office data showed Monday.
The firmer growth marked the fourth consecutive quarter of expansion and also beat economists’ median forecast for a 0.7 percent gain. It was mostly driven by improvements in capital expenditure and private consumption.
However, analysts say the third quarter strength, which was the weakest growth seen this year, masks some fragility that could to lead to a much weaker performance going forward.
“While Japan’s economy expanded more rapidly ahead of October’s sales tax hike than initially estimated, output is set to shrink in 2020,” said Marcel Thieliant, senior Japan economist at Capital Economics.
“The main reason for the upward revision was that non-residential investment jumped by 1.8 percent on-quarter instead of the preliminary estimate of 0.9 percent,” he wrote in a note.
Behind the big headline increase was strong investment from non-manufacturers, such as retailers, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“In contrast to that, spending by manufacturers wasn’t so strong.”
The jump in capital spending outpaced the median forecast for a 1.7 percent increase.
The annualized GDP growth translates into quarter-on-quarter expansion of 0.4 percent from April-June, compared with a stronger 0.5 percent gain in the second quarter and a preliminary reading of a 0.1 percent increase. – Reuters