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Japan’s GDP expanded grew at an annualised rate of 2.8 per cent in the October to December 2024 period, significantly exceeding consensus analyst estimates and marking the third straight quarter of expansion.
The preliminary report, released by the Cabinet Office on Monday, showed a quarter-on-quarter, inflation-adjusted real GDP expansion of 0.7 per cent, versus the median forecast of a 0.3 per cent rise, according to analysts polled by Reuters.
Japan’s overall GDP figure was further boosted by corporate spending, which rose 0.5 per cent quarter on quarter.
Though subject to revision, the GDP growth figure signalled that Japan’s economy remained in fair shape despite the ructions that accompanied the Bank of Japan’s move last year to “normalise” monetary policy and begin a cycle of interest rate rises.
In January, the BoJ increased rates to about 0.5 per cent — the highest level in 17 years — and signalled more rises to come as inflation remains entrenched.
Most economists now expect the BoJ to raise rates at least once in 2025, with many pinpointing the central bank’s meeting in July as the most likely date.
Several economists who had forecast GDP growth would decelerate to an annualised rate of about 1 per cent in the fourth quarter, had expected the overall numbers to be dragged down by private consumption as record high rice prices and warmer weather hit spending on food and winter clothing.
Private consumption, which represents about half of Japan’s economic output, rose 0.1 per cent in the quarter, bucking most analysts’ expectations of a contraction.
On Friday, the government is due to release January’s reading of national consumer price growth. Analysts at Goldman Sachs expect that the new core index, which excludes fresh food and energy, will show inflation rising at 2.6 per cent year on year, accelerating slightly from December.
High prices for rice, which is not counted as fresh food, have begun to push up the cost of rice products, including processed foods and restaurant meals.
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