Japan’s economy expanded at a better-than-expected annual rate of 2.8% in the October-December quarter, driven by steady exports and moderate consumption. This is the third consecutive quarter of growth, according to preliminary data from the Cabinet Office.
On a quarterly basis, Japan’s economy grew 0.7%, and private consumption increased at an annual rate of 0.5%. Exports jumped 4.3% during this period, while capital investment rose 0.5%. The strong data lifted Japan’s benchmark Nikkei 225 and other Asian markets.
Some analysts attribute the improved performance to the anticipation of President Donald Trump’s tariffs, which may have boosted trade. However, Japan has struggled with deflation in recent years, and lower prices can hinder growth. Despite this, recent wage growth has helped keep inflation at bay, currently around 2%, which is within the Bank of Japan’s target range.
The central bank may now consider further interest rate hikes to combat deflation, having raised rates to about 0.5% last month. The next monetary policy meeting is scheduled for March. Market analysts believe that stronger growth could prompt the Bank of Japan to increase interest rates again, while a slowdown in private consumption growth may be alleviated by higher wages ahead.
Source: https://finance.yahoo.com/news/japans-economy-grows-more-expected-022639376.html