Japan’s third-quarter growth rate doubles in revision, outlook brightens

Japan's national flag is seen in front of a crane at a construction site at a business district in Tokyo
Japan’s national flag is seen in front of a crane at a construction site at a business district in Tokyo, Japan, January 5, 2017. Picture taken on January 5, 2017. REUTERS/Kim Kyung-Hoon

December 8, 2017

By Stanley White

TOKYO (Reuters) – Japan’s economic growth rate doubled in the third quarter thanks to big gains in capital expenditure, revised data showed on Friday, with expansion seen to continue thanks to buoyant exports.

The capital expenditure component of gross domestic product was revised to a rise of 1.1 percent from the previous quarter, well over the forecast 0.4 percent growth, and soaring above the preliminary 0.2 percent reading.

The economy grew an annualized 2.5 percent in July-September, more than the median estimate for 1.5 percent annualized growth and more than the preliminary reading of a 1.4 percent annualized expansion.

The figure translates into quarter-on-quarter growth of 0.6 percent, versus a preliminary reading of 0.3 percent growth and the median estimate for 0.4 percent growth.

The revised figures showed that Japan is in its longest uninterrupted period of growth since comparable data became available in 1994.

This a boon to the government as it is expected to agree later on Friday a spending package to subsidize education and encourage more corporate investment.

Steady economic expansion also offers hope to the Bank of Japan that inflationary pressure will build up next year and nudge consumer prices closer to its 2 percent inflation target.

Net exports contributed 0.5 percentage point in the third quarter, unchanged from the preliminary reading.

Private consumption fell 0.5 percent in July-September, also unchanged from the preliminary reading.

Japan’s economy has expanded for seven consecutive quarters, and many economists expect growth to continue as consumer spending gains strength and export growth is seen on track to continue.

(Reporting by Stanley White; Editing by Eric Meijer)

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