Japan narrowly avoided a technical recession in the second half of 2023, data showed on Monday, but economists stated that performance remained declining, according to Asian media.
The Cabinet Office reported that gross domestic product (GDP) increased by 0.1 per cent between October and December compared to the previous three months. This reversed a preliminary estimate of a 0.1 per cent economic contraction following negative growth of 0.8 per cent in the third quarter.
A technical recession is usually defined as a fall in GDP over two consecutive quarters.
The change reflected an increase in corporate investment, which was estimated to have risen by 2.0 per cent, compared with an initial forecast of a 0.1 per cent contraction.
However, Japanese consumption in both the private and public sectors contracted more sharply than originally estimated. Senior economist at Moody’s, Stefan Angrick, commented that there was “nothing to write home about” in the latest report.
Business investment has underperformed over the past year. Consumption spending has fallen for three consecutive quarters. And output is still lower than in the second quarter of 2023. In all, Japan’s economy is doing poorly.
The latest data came amid speculation over when the Bank of Japan (BoJ) might finally end its negative interest rate policy. That could potentially happen as soon as the next meeting scheduled for 19 March.
Japan has been struggling with stagnant economic growth and deflation for decades, but economists argue there are signs that rates may rise enough for the BoJ to normalise its stance.
