By Kantaro Komiya
TOKYO (Reuters) – Japan’s economy probably expanded in the final three months of 2024 marking a third quarter of consecutive growth, a Reuters poll showed, as strong business investment outweighed anaemic consumption.
The Bank of Japan raised short-term interest rates last month to their highest in 17 years, and growth momentum in the world’s fourth-largest economy will be among the key factors determining its rate hike schedule this year.
Japan’s real gross domestic product (GDP) is forecast to have risen an annualised 1.0% in October-December, according to a median forecast of 17 economists, slightly less than the revised 1.2% expansion in July-September.
On a quarter-on-quarter basis before annualisation, the fourth-quarter growth rate was projected at 0.3%, on par with the previous quarter.
Private consumption, which accounts for more than half Japan’s economic output, probably shrank by 0.3% after being revised down to 0.7% in the third quarter. Analysts pointed out the creeping impact of a three-year decline in real wages that was weighing on households’ purchasing power.
Meanwhile, after a negative reading in July-September, capital expenditure is seen up 1.0%. Companies’ capital investment remains strong amid labour shortages, recent data has shown.
“The headline figure was puffed up by the positive external demand contribution due to shrinking imports, while consumption and exports contracted; what’s inside isn’t quite good,” Saisuke Sakai, chief economist at Mizuho Research & Technologies, wrote in a report.
“In January-March, capital expenditure should keep growing, but consumption may remain sluggish given weak real wages, and slowing U.S. and Chinese economies will keep curbing exports.”
The GDP data will be announced on February 17 at 8:50 a.m.(2350 GMT on February 16).
Separate data from the BOJ is expected to show Japan’s wholesale inflation increased 0.3% month-on-month in January, the same as the previous month’s rate, according to the poll.
The indicator, which measures prices of goods firms charge each other, will be released on February 13 at 8:50 a.m. (2350 GMT on February 12) and will probably show a rise of 4.0% from a year ago, faster than December’s 3.8% growth.
(Reporting by Kantaro Komiya; Editing by Kate Mayberry)
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