Commuters walking through the intersection in Shibuya, Tokyo
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Official data revised on Monday showed Japan’s economy has returned to the growth seen in the October-December period of last year, avoiding a technical recession.
Japan’s gross domestic product Year-over-year growth in the fourth quarter was 0.4%. Provisional data from last month showed GDP contracted by 0.4%. This follows a revised 3.3% decline in the July-September period.
Japan’s economy also expanded by 0.1% Economic growth contracted by 0.8% compared to the previous three months in the third quarter, compared with preliminary data showing a contraction of 0.1% compared to the previous three months in the fourth quarter.
Two consecutive quarters of GDP contraction may have confused discussions of interest rate normalization for Bank of Japan Governor Kazuo Ueda.
The upward revision comes after statistics released by the Ministry of Finance last Monday showed that capital investment in the fourth quarter rose 16.4% year-on-year, or 10.4% on a seasonally adjusted quarterly basis. My expectations were high.
However, rising inflation has put pressure on domestic demand and consumer spending, underscoring the fragility of the country’s growth. Reuters reported, citing three people familiar with the matter, that the Bank of Japan may downgrade its assessment of consumption and factory production at its next policy committee meeting on March 18-19.
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