Japan has managed to evade entering a technical recession following the revision of its official economic growth figures.
Revised data indicates that Japan’s gross domestic product (GDP) grew by 0.4% in the last quarter of 2023 compared to the same period a year earlier.
Initial figures released last month suggested a second consecutive quarter of economic contraction, which typically signifies a technical recession.
However, the revised figures, while avoiding recessionary territory, still fell short of expectations. Some economists had anticipated a more significant upward revision of around 1% for fourth-quarter GDP.
Recent data from the Ministry of Finance had hinted at a possible economic recovery, showing a notable increase in business investments.
Nonetheless, Monday’s data from Japan’s Cabinet Office revealed a decline in private consumption, which accounts for approximately 60% of the economy, during the same period.
Japan’s economic outlook remains uncertain, with factors such as China’s economic slowdown and production halts at car manufacturer Daihatsu potentially contributing to further economic contraction in the current quarter.
Amidst these challenges, there is speculation that the country’s central bank may consider raising interest rates in the near future.
Since implementing a policy of negative interest rates in 2016 to stimulate spending and investment, the Bank of Japan has maintained rates at -0.1%.
This move aims to reduce the attractiveness of the yen to international investors, thereby lowering the currency’s value.
As a result of this policy, Japan’s primary stock market index, the Nikkei 225, experienced a decline of approximately 2.5% on Monday morning.