UPDATE1: Japan GDP expands 0.5% in Oct.-Dec., marks longest growth run in 28 yrs

Japan Economic Newswire |

Japan's economy grew at an annualized rate of 0.5 percent in the October-December period, as spending by consumers and companies rose in a sign of strengthening domestic demand, government data showed Wednesday.

The country's inflation-adjusted gross domestic product expanded for the eighth straight quarter, the longest growth run in 28 years. But it slowed from a revised 2.2 percent gain in the July-September quarter and came below the average market forecast.

Compared with the previous quarter, the world's third-largest economy registered a 0.1 percent growth, the Cabinet Office said.

The GDP figures give fresh evidence that the current moderate growth cycle remains in place, helped by robust exports of semiconductor-related equipment and cars in recent quarters. Exports rose 2.4 percent, while imports climbed 2.9 percent.

Private consumption, accounting for nearly 60 percent of GDP, gained 0.5 percent, marking the first rise in two quarters after poor weather conditions hurt consumer sentiment last summer.

In the October-December quarter, sales of goods such as smartphones and cars were robust. Consumers also increased spending on eating out.

Prime Minister Shinzo Abe is seeking to inject momentum into his push for what he has termed as a "virtuous cycle" of economic growth by encouraging companies to raise pay and increase business investment.

Despite the tightest labor market in decades, economists view recent wage growth as rather modest.

For five quarters in a row, businesses continued to boost investment, lifting capital expenditure by 0.7 percent.

Due to the waning impact of extra government spending seen earlier, public investment dropped 0.5 percent.

In nominal terms, or unadjusted for price changes, the economy shrank an annualized 0.1 percent, the Cabinet Office said.

"The economy has been recovering moderately," Economic and Fiscal Policy Minister Toshimitsu Motegi told reporters following the GDP release.

"Both employment and income conditions are expected to improve and we expect an economic recovery mainly driven by domestic demand such as consumption and capital expenditure," Motegi said.

In 2017, the Japanese economy grew 1.6 percent in real terms, up for the sixth straight year. In nominal terms, the GDP expanded 1.4 percent to record-high 546 trillion yen ($5.1 trillion).


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