By Makiko Yamazaki and Chang-Ran Kim<\/p>\n
TOKYO, Feb 16 (Reuters) – Japan’s economy limped back to meagre growth in the fourth quarter, significantly missing market expectations in a key test for Prime Minister Sanae Takaichi’s government as cost-of-living pressures \u200cdrag on confidence and domestic demand.<\/p>\n<\/p>\n
Fresh off a sweeping election victory, Takaichi’s administration is preparing to ramp up investment through \u200ctargeted public spending in sectors seen as vital to economic security.<\/p>\n
Monday’s data bring sharp focus to the challenge at hand for policymakers at a time when the \u200bBank of Japan has reiterated its pledge to keep raising interest rates and normalise monetary settings from years of ultra-low borrowing costs.<\/p>\n
“It shows that the economy’s recovery momentum is not very strong,” Meiji Yasuda Research Institute economist Kazutaka Maeda said. “Consumption, capital expenditure and exports – areas we hoped would drive the economy – just haven’t been as strong as we expected.”<\/p>\n
Gross domestic product in the world’s fourth-largest economy increased an annualised 0.2% \u200cin the October-December quarter, government data showed, well \u2060short of a median market estimate of a 1.6% gain in a Reuters poll. It barely scraped back to growth from a larger revised 2.6% contraction in the previous quarter.<\/p>\n
The reading translates into a quarterly \u2060rise of 0.1%, also weaker than the median estimate of a 0.4% uptick.<\/p>\n
Economists project Japan will continue to expand at a gradual pace in coming months, though the fourth quarter’s weak outcome suggests the economy might struggle to fire on all cylinders.<\/p>\n
“Whether the economy can achieve sustainable growth \u200breally depends \u200bon whether real wages can firmly return to positive growth,” Shinichiro Kobayashi, \u200bprincipal economist at Mitsubishi UFJ Research and Consulting, said. “In \u200cthat sense, the key will be the outcome of this year’s wage negotiations in the coming months.”<\/p>\n
A survey this month by the Japan Center for Economic Research showed 38 economists forecast an average annualised growth of 1.04% in the first quarter and 1.12% in the second quarter this year.<\/p>\n
Kobayashi said the GDP report is unlikely to affect the Bank of Japan’s monetary policy decisions. “Rather than this rate hike causing the economy to stall, the BOJ’s focus is likely to be on how to contain inflation,” he said.<\/p>\n
Private consumption, which \u200caccounts for more than half of economic output, rose 0.1% in October-December, matching \u200bmarket estimates.<\/p>\n
It cooled from the 0.4% rise in the previous quarter, indicating that \u200bpersistently high food costs remain a drag on household spending.<\/p>\n
Capital \u200bspending, a key driver of private demand-led growth, also rose at a slow pace of 0.2% in \u200cthe fourth quarter, versus a rise of 0.8% in \u200bthe Reuters poll.<\/p>\n
Net external demand, or \u200bexports minus imports, contributed nothing to growth, versus a 0.3 point drag in the July-September period.<\/p>\n
Exports posted a milder drop after the United States formalised a baseline 15% tariff on nearly all Japanese imports, down from 27.5% on autos and initially \u200bthreatened 25% on most other goods.<\/p>\n
“The impact \u200cof tariffs appears to have peaked in July-September, but judging from the latest results, there is at least some \u200bpossibility that firms will continue to take a somewhat cautious stance going forward,” Meiji Yasuda’s Maeda said.<\/p>\n
(Reporting by Makiko \u200bYamazaki and Chang-Ran Kim; Editing by Sam Holmes and Shri Navaratnam)<\/p>\n","protected":false},"excerpt":{"rendered":"By Makiko Yamazaki and Chang-Ran Kim TOKYO, Feb 16 (Reuters) – Japan’s economy limped back to meagre growth…\n","protected":false},"author":2,"featured_media":428250,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[36021,84,1294,386,157019,86762,157018,93942,56,54,55],"class_list":{"0":"post-428249","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bank-of-japan","9":"tag-business","10":"tag-economy","11":"tag-japan","12":"tag-positive-growth","13":"tag-sanae-takaichi","14":"tag-shinichiro-kobayashi","15":"tag-sustainable-growth","16":"tag-uk","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/428249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=428249"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/428249\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/428250"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=428249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=428249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=428249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}