Japan’s economy expanded at a faster pace than initially reported in the third quarter, thanks to upward revisions in capital investment and exports. The revised Gross Domestic Product (GDP) growth rate of 1.2% annualized is higher than the initial estimate of 0.9% and economists’ median forecast.
The upgraded numbers are attributed to a smaller-than-expected decline in capital expenditure and external demand, which fell less than initially thought. However, private consumption, accounting for over half of Japan’s economy, rose only 0.7%, lower than the preliminary reading of 0.9%.
Analysts see this data as neutral for the Bank of Japan’s (BOJ) interest rate hike timing. While it supports the case for a December rate hike, concerns about weak consumption remain.
The BOJ will scrutinize this data at its next policy meeting on December 18-19, with some analysts expecting a short-term interest rate hike from the current 0.25%. However, there is uncertainty surrounding whether the December hike will materialize given soft consumption and anxiety over US economic policy in a second Trump presidency.
Market expectations suggest the BOJ may raise rates again by March, but divisions exist on whether it would come in December or early next year. The BOJ remains cautious on the timing of the next rate hike, with December no longer considered a done deal.
Source: https://www.reuters.com/markets/asia/japans-revises-up-q3-gdp-annualised-12-growth-2024-12-09