Japan downgrades Q4 GDP on service sector weakness

By Kantaro Komiya and Daniel Leussink

TOKYO (Reuters) -Japan’s financial rebound was softer than preliminary estimates within the closing quarter of 2021, revised information confirmed on Wednesday, because the pickup seen in shopper and enterprise spending was weaker than first reported.

The downwardly revised progress is unhealthy information for policymakers tasked with retaining the nation’s fragile restoration on observe as a soar in commodity costs as a result of Ukraine disaster and chronic provide disruptions heighten financial uncertainty.

Revised gross home product (GDP) information launched by the Cupboard Workplace on Wednesday confirmed Japan expanded an annualised 4.6% in October-December. That was decrease than economists’ median forecast for a 5.6% acquire and the preliminary studying of 5.4% launched final month.

“This implies that Japan’s financial restoration from the pandemic is weaker than that of Europe and the USA,” mentioned Takeshi Minami, chief economist at Norinchukin Analysis Institute.

On a quarter-on-quarter foundation, GDP expanded 1.1%, falling in need of the median market expectations for a 1.4% acquire.

The change was largely as a result of downgrade in non-public consumption, a authorities official instructed a media briefing.

Non-public consumption, which makes up greater than a half of Japan’s GDP, elevated 2.4% in October-December from the earlier quarter, revised down from an initially-estimated 2.7% acquire. Spending within the service sector, specifically, was downgraded to a 3.1% enlargement from an preliminary 3.5% improve.

Current trade ministry information for December confirmed spending on providers similar to eating places and prepare rides was weaker than the preliminary estimate primarily based on private-sector figures, the official mentioned.

“Non-public consumption was seemingly fairly weak in January, as a consequence of smooth spending on capital items similar to automobiles and providers,” mentioned Minami, including recent uncertainty round Ukraine is cooling enterprise funding.

Within the fourth quarter, capital expenditure grew 0.3%, decrease than economists’ forecasts for a 0.7% acquire and a preliminary determine of a 0.4% advance.

Whereas information earlier this month confirmed sturdy fourth-quarter enterprise spending, the revised GDP figures mirrored weak point in objects similar to software program funding, the official mentioned.

Home demand as a complete contributed 0.9 of a share level to revised GDP figures, whereas internet exports added 0.2 of a share level.

Economists in a Reuters ballot final week forecast annualised progress of 0.4% within the January-March quarter, slashing earlier projections given Omicron coronavirus variant infections and uncertainties brought on by the conflict in Ukraine.

Yusuke Shimoda, senior economist at Japan Analysis Institute, mentioned he was nonetheless anticipating progress to return in constructive within the first quarter.

“However we’re nonetheless in early March,” he added. “Additional draw back dangers cannot be dominated out relying on Russia’s actions.”

(Reporting by Kantaro Komiya and Daniel Leussink; Enhancing by Sam Holmes)

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button