Japan Crawling Slowly Out of Recession
Japan's economy stabilized in the fourth quarter after two quarters of a shallow recession, revised data showed on Friday, but a third consecutive monthly current account deficit in January showed an anticipated recovery was slow in coming.
The data signaled the challenge facing Prime Minister Shinzo Abe, who swept to power in December promising more fiscal spending and big monetary stimulus to rev up the economy and end nearly two decades of deflation.
His policies have driven the yen to 3-1/2 year lows against the dollar, supporting the economy's traditional export engine. But the weaker currency has also driven up import costs at a time when energy imports have surged, putting pressure on the balance of payments.
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Japan's gross domestic product was unchanged in October-December from the previous quarter, revised data from the Cabinet Office showed.
That compared with a median forecast of economists for 0.1 percent growth, and an initial estimate of a 0.1 percent contraction, reflecting upward revisions to private capital spending and inventory and private consumption.
Separate data from the finance ministry showed Japan's current account deficit was 364.8 billion yen ($3.85 billion) in January. That was less than a median forecast for a deficit of 626.0 billion yen, but marked a third straight month of deficit, the longest sequence since the series began in 1985.
On Thursday, the Bank of Japan held policy steady and said in its assessment the economy had stopped worsening. That chimed with economists' view there will be moderate growth this year on the back of a global recovery and Abe's policies.
Investors expect the central bank will become more aggressive in its policy from next month, with Haruhiko Kuroda, the president of the Asian Development Bank and an advocate of aggressive easing, set to become governor in coming weeks.
"The GDP headline is in line with the expectation and there is no change to a view that the economy has hit the bottom late last year," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"But a pick-up in exports is tepid, reflecting slower recovery in overseas economy than the market has expected. The nation's economy probably won't be able to reach annualized 2 percent growth January-March."
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The GDP figures translated into annualized growth of 0.2 percent in price-adjusted real terms, in line with expectations and better than an initial reading of a 0.4 percent contraction, the data showed.
Japan's performance compared with an annualized 0.1 percent expansion in the United States in the same period, and a 2.3 percent contraction in the 17-country euro zone.
Capital expenditure fell a revised 1.5 percent in the fourth quarter, compared with a 1.2 percent decline expected by economists and a preliminary reading of a 2.6 percent decline.