Japan narrowly avoided a technical recession in the second half of last year, official data showed yesterday, but economists said the performance of the world’s No. 4 economy remains in the doldrums.
Meanwhile, Japanese equities slid the most since Oct. 4 last year, with both benchmarks declining more than 2 percent yesterday, as growing speculation the Bank of Japan (BOJ) would raise interest rates lifted the yen and hurt exporters.
GDP inched up 0.1 percent in the final quarter of last year from the previous three months, Japan’s Cabinet Office said.
Photo by Kazuhiro NOGI / AFP
This reversed an earlier preliminary estimate of a 0.1 percent contraction following a decline of 0.8 percent in the third quarter.
Technical recession is generally defined as two successive quarters of falling GDP.
However, the reading still fell short of 0.3 percent quarterly growth that economists had expected for the revision, a survey by Bloomberg News showed.
The change reflected upgraded corporate investment, estimated to have risen 2.0 percent compared with the original projection of a 0.1 percent contraction.
However, Japanese consumption, both in private and government sectors, contracted further than the earlier estimate.
The latest figures came as speculation swirls about when the BOJ might finally end its negative interest rate policy. This might come potentially as early as Tuesday next week at the central bank’s next meeting.
Expectations the BOJ would tweak policy were further fueled by reports that the bank is considering scrapping its yield curve control program, and that a rising number of policymakers are leaning toward ending negative rates due to expected larger wage increases this year.
Due to a stronger yen and a sell-off in tech shares, the TOPIX yesterday closed 2.2 percent lower at 2,666.83 in Tokyo, with 31 of 33 sub-sectors dropping, while the exporter-heavy Nikkei 225 declined 2.19 percent to 38,820.49, leading losses in Asia.
Additional reporting by Bloomberg
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